DEPARTMENT OF DEFENSE APPROPRIATIONS

FOR FISCAL YEAR 2013

WEDNESDAY, JUNE 13, 2012

U.S. SENATE,
APPROPRIATIONS,
Washington, DC.
The subcommittee met at 10:30 a.m., in room SD192, Dirksen
Senate Office Building, Hon. Daniel K. Inouye (chairman) presiding.
Present: Senators Inouye, Leahy, Harkin, Durbin, Feinstein, Mikulski, Kohl, Murray, Reed, Cochran, Hutchison, Collins, Murkowski, Graham, and Coats.
SUBCOMMITTEE

OF THE

COMMITTEE

ON

DEPARTMENT OF DEFENSE
OFFICE

OF THE

SECRETARY

OF

DEFENSE

STATEMENT OF HON. LEON E. PANETTA, SECRETARY OF DEFENSE

ACCOMPANIED BY HON. ROBERT F. HALE, UNDER SECRETARY OF DEFENSE, COMPTROLLER
OPENING STATEMENT OF CHAIRMAN DANIEL K. INOUYE

Chairman INOUYE. This morning, I would like to welcome the

Honorable Leon E. Panetta, Secretary of Defense, and General
Martin E. Dempsey, Chairman of the Joint Chiefs of Staff, to testify on the administrations budget request for fiscal year 2013.
Gentlemen, you assumed these positions during a very challenging moment in history. Our economy, our country is facing a
budget deficit, and you have been tasked with significantly reducing the Department of Defenses (DOD) budget plans in an effort
to cut down spending.
These budget reductions come at an occasion when we are fighting a war in Afghanistan and the counterterrorism threat worldwide. At the same time, the world is changing rapidly, and DOD
is being called upon to respond to threats ranging from cyberspace,
weapons proliferation, rising powers, and instability in key regions,
such as we have witnessed with the Arab Spring.
DODs fiscal year 2013 budget request totals $604.5 billion that
this subcommittee oversees. This is a decrease of $28.8 billion over
last years enacted budget, mainly due to the drawdown of operations in Afghanistan and Iraq.
However, over the next decade, the Budget Control Act of 2011
(BCA) sets limits for DOD, which is $487 billion less than what the
Department had planned to spend.
(1)

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In order to meet the new fiscal realities, you have produced a defense strategy to help guide these budget reductions. This strategy
moves from having a capability to fight two major theater wars, to
instead defeating a major adversary in one theater while denying
aggression or applying unacceptable costs on another aggressor.
In addition, it shifts the militarys focus to increase emphasis on
the Pacific and Middle East regions. Furthermore, it commits the
Department to institutionalize capabilities to deal with what were
once considered nontraditional or asymmetric threats, such as increasing counterterrorism capacity, enhancing cyber operations,
and countering antiaccess threats.
Most importantly, the strategy reaffirms the administrations
support of the All-Volunteer Force and maintaining the readiness
of this force as a vital component of our national security. The defense strategy does not, however, take into consideration another
component of the Budget Control Act known as sequestration.
As you know, beginning on January 2, 2013, if a deficit reduction
agreement is not reached, DOD will take its first increment of an
across-the-board reduction of nearly $500 billion over the next 10
years.
Gentlemen, I look forward to having a candid dialogue this morning on this issue, as well as others I have highlighted.
We sincerely appreciate your service to our Nation, and the dedication and sacrifices made daily by the men and women of our
armed services.
We could not be more grateful for what those who wear our Nations uniform and those who support and lead our military do for
our country each and every day.
Mr. Secretary, General, your full statements will be made part
of the record, and I wish to now turn to the Vice Chairman, Senator Cochran, for his opening remarks.
STATEMENT OF SENATOR THAD COCHRAN

Senator COCHRAN. Mr. Chairman, Im pleased to join you in welcoming our distinguished panel of witnesses this morning to review
the Presidents budget request for the Department of Defense, and
to give us an overview of the needs and challenges facing our national security interests.
We thank you very much for your willingness to serve in these
important positions. They really are complex and couldnt be more
important.
We appreciate the dedication and the years of experience that
you bring to the challenge as well, and we expect to have an opportunity today to find out some of the specific details that need to be
brought to the attention of the Senate.
Thank you very much.
Chairman INOUYE. I thank you very much. May I now call upon
the Secretary.
SUMMARY STATEMENT OF HON. LEON E. PANETTA

Secretary PANETTA. Thank you, Mr. Chairman. Senator Cochran,

and members of the subcommittee.

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It is a distinct privilege and honor to have the opportunity to appear before this subcommittee of the Senate Appropriations Committee.
First and foremost, let me express my personal thanks to all of
you for the support that you provide our men and women in uniform and the Department.
Ive had the honor of working with many of you in other capacities, and I just want to thank you for your patriotism in providing
very important public service to this country, but from my pointof-view right now, providing the support that we absolutely need
at the Department of Defense in order to keep this country safe.
DEFENSE BUDGET

Im here to discuss the Presidents budget request for fiscal year

2013. I also want to comment as well on the problems associated
with sequestration that faces us in January 2013, and mention also
some of the budgetary challenges that we still face in fiscal year
2012 as a result of fuel costs and other contingencies that were facing.
With regards to the fiscal year 2013 budget request, this was a
product of a very intensive strategy review that was conducted by
senior military and civilian leaders of the Department under the
advice and guidance of the President.
The reasons for the review are clear to all of us. First and foremost, we are at a strategic turning point after 10 years of war, and
obviously, a period when there was substantial growth in the defense budgets.
Second, we are now a country that is facing very serious debt
and deficit problems. And the Congress did pass the Budget Control Act of 2011 which imposes spending limits that reduce the defense base budget by $487 billion over the next decade.
And Ive always recognized, based on my own background, having worked on budget issues, that defense does have a role to play
in trying to get our fiscal house in order.
For that reason, we looked at this as an opportunity to develop
a new defense strategy for the future, not to simply have to respond to the budget requirements that were here, but to do it in
a way that would provide a strong defense for the country in the
future.
The defense strategy that we developed does reflect the fact that
as we end the war in Iraq and draw down in Afghanistan, we are
at a turning point that would have required us, frankly, to make
a strategic shift, probably under any circumstances.
The problem is that unlike past drawdowns, where the threats
that we confronted receded, after wars, after the Vietnam war,
after the fall of the Soviet Union, the problem is we continue to
face very serious security challenges in the world of today.
We are still at war in Afghanistan. We still confront terrorism
even though theres been significant damage to the leadership of al
Qaeda. The reality is, we confront terrorism in Somalia, in Yemen,
in North Africa.
We continue to see the proliferation of weapons of mass destruction. We continue to see threats from Iran and North Korea. We
continue to have turmoil in the Middle East. We see the rising

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powers in Asia that represent a challenge in terms of stability in
that region as well.
And there are growing concerns about cyber intrusions and cyber
attacks. We have to meet all of these challenges, and at the same
time, meet our responsibility to fiscal discipline.
I dont think we have to choose between our national security
and our fiscal security. But, at the same time, this is not an easy
task.
To build the force we need for the future, we developed strategic
guidance that consists really of five key elements that were the elements that guided us in terms of the budget recommendations we
made.
First of all, we know that the military is going to be smaller, and
its going to be leaner in the future. But it has to be agile, and it
has to be flexible. It has to be quickly deployable. Yet, it also has
to be technologically advanced.
Second, because of the world we live in, and where we confront
some of the most serious problems that face us, we have to rebalance our global posture and presence to emphasize the Asia-Pacific
region and the Middle East. Those are the two areas where we confront the most serious challenges.
Third, we have to build for the rest of the world that we deal
with, we have to build innovative partnerships and strengthen key
alliances and partnerships elsewhere in the world, so that we
maintain a presence in Latin America, Africa, Europe, and elsewhere.
Fourth, we have to ensure that we have a force that can confront
and defeat aggression from any adversary, anytime, anywhere.
And, last, this cant just be about cutting the budget. It also has
to be about investmentsinvestments in new technology and new
capabilities, as well as our capacity to grow, adapt, and mobilize as
needed.
In shaping this strategy, we did not want to repeat the mistakes
of the past. Our goals were the following: Number one, maintain
the strongest military in the world. Thats what we have now.
Thats what we want to have in the future.
We do not want to hollow out the force, where you maintain a
large force, less spending, and the result is that we weaken everything at the Defense Department by our failure to be able to address the needs of that kind of force.
And that was a mistake thats been made in the past. We dont
want to make that mistake again today or in the future.
That means we have to take a balanced approach to budget cuts.
We have to look at every area of the budget and put everything on
the table. And it also means that we do not want to break faith
with the troops and the families, particularly, the troops that have
been deployed time and time and time again.
As a result of these efforts, the Department, both our military
and civilian leaders, strongly unified behind the recommendations
that we presented. Consistent with the Budget Control Act, this
budget reflects that in the next 5 years, well achieve savings of almost $260 billion, with 10-year savings of $487 billion.
The savings come from four areas: One, efficiencies; two, force
structure; three, procurement reforms; and, last, compensation.

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Let me walk through each of these areas. First, on efficiencies.
Efficiencies yield about one-quarter of the targeted savings that we
have in this package. On top of the $150 billion in efficiencies that
were proposed in the fiscal year 2012 budget, weve added another
$60 billion, primarily from streamlining support functions, consolidating information technology (IT) enterprises, rephasing military
construction programs, consolidating inventory, and reducing service support contractors.
As we reduce force structure, we also have a responsibility to be
cost efficient in terms of the support for that force. And thats the
reason that the recommendation has been to authorize another
base realignment and closure process for 2013 and 2015.
And as someone who has gone through base realignment and closure (BRAC), I realize how controversial this process is for the
members and for the constituencies.
And yet, we do need, if were going to bring the force down, we
have got to find an effective way to achieve infrastructure savings.
And thats the reason that recommendation was made.
Efficiencies are still not enough to achieve the necessary savings.
Budget reductions of this magnitude, almost half of $1 trillion, require significant adjustments to force structure, procurement investments, and compensation as well.
We achieve those in the context of the elements of the new strategy that I discussed, so let me just walk through each of those.
First, we obviously have a force that is smaller and leaner, but
it has to be more agile and technologically advanced. We knew that
coming out of the wars, the military would be smaller. And to ensure an agile force, we made a conscious choice not to maintain
more force structure than we could afford to properly train and
equip.
Were implementing force structure reductions consistent with
this new strategic guidance. It will give us a total savings of about
$50 billion over the next 5 years.
So, those recommendations are to gradually re-size the Active
Army. Were at about 560,000 now. We would bring that down over
5 years to 490,000, about a 70,000 reduction over that period.
Its a force that would be flexible, would be agile. It would be
ready. It would be lethal. We would still maintain 18 divisions, 65
brigade combat teams, and 21 aviation brigades.
We would do the same with the Marine Corps. Were at about
202,000 in the Marine Corps. We would bring them down to
182,000 over the next 5 years. Thats a reduction of about 20,000.
Again, they would still remain the strongest expeditionary force
in the world. They would have 31 infantry battalions, 10 artillery
battalions, and 20 tactical air squadrons.
AIR FORCE AND NAVY INVENTORY

We would also reduce and streamline the Air Forces airlift fleet.
In addition, the Air Force would eliminate seven tactical air squadrons, but we still would retain a robust force of 54 combat-coded
fighter squadrons.
The current bomber fleet would be maintained. We obviously
have the Joint Strike Fighter in production, and were also going

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to develop a new generation bomber that we look forward to in the
future.
We also have a fleet of 275 strategic airlifters and 318 C130s
along with our refueling tanker capabilities.
The Navy would retire seven lower priority Navy cruisers. And
the reason they focused on that is because these cruisers have not
been upgraded with ballistic missile defense capability. Theyre old.
They need repairs. And so that was an area that they decided to
try to achieve savings.
That would still maintain a force in the Navy of 285 ships, 11
carriers, 9 large deck amphibs, 82 cruisers and destroyers, and 50
nuclear-powered attack submarines. And we would achieve a naval
number of about 300 ships by 2020.
Second, in rebalancing our global posture to emphasize Asia-Pacific and the Middle East, we made clear that weve got to protect
capabilities needed to project power in Asia-Pacific and in the Middle East.
To this end, the budget, as I said, maintains the current bomber
fleet, maintains our aircraft carrier fleet, maintains the big deck
amphibious fleet, and it restores Army and Marine Corps force
structure, particularly in the Pacific.
Were looking at, weve already provided for a rotational deployment of Marines in Darwin in Australia. Were looking at doing the
same thing in the Philippines as well as elsewhere.
And the same thing is true with regard to a strong presence in
the Middle East. Because of the threats in that region, we have
maintained a strong presence of troop strength in that area as well.
Were building innovative partnerships and trying to strengthen
our alliances throughout the world. And the way we are doing this
is by developing this innovative, rotational presence where troops
will go into an area, exercise with them, provide guidance and assistance, develop alliances, develop their capabilities, and build key
alliances and partnerships for the future.
Thats the message I delivered to the Pacific on this last trip. Its
well received. I delivered the same message to Latin America. Its
well received. These countries want to develop their capabilities.
This is not a question of the United States going around basically
exerting our own power and telling these countries well defend
them. Theyve got to develop their capabilities to be able to secure
themselves for the future. And thats what this proposal provides
for.
Fourth, we ensure that we can confront and defeat aggression
from any adversary, anytime, anywhere, and that, obviously, goes
to the force structure that would sustain a military thats the
strongest in the world, capable of quickly and decisively confronting aggression wherever and whenever necessary.
In the 21st century, our adversaries are going to come at us
using 21st century technology. Thats the world we live in. And
weve got to be able to respond with 21st century technology.
So, we must invest. Weve got to invest in space. Weve got to invest in cyberspace. Weve got to invest in long-range precision
strikes. Weve got to invest in unmanned vehicles. Weve got to invest in special operations forces. Weve got to invest in the latest

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technologies to ensure that we can still confront and defeat multiple adversaries.
And the last area is to protect, obviously, and prioritize key investments, and have the capacity to grow and adapt and mobilize.
I talked about some of the areas that we want to invest in. This
budget provides almost $12 billion of investment in science and
technology, $10.4 billion in special operations forces, about $4 billion in unmanned air systems, and about $3.5 billion in cyber.
NATIONAL GUARD AND RESERVE UNITS

The last point I would make is we have got to maintain a strong

Reserve and a strong National Guard that can respond if we have
to mobilize quickly. Thats been a key to our ability to mobilize over
these last 10 years.
And today, I have to tell you, when you go out to the battlefield,
you cant tell the difference between Active Duty and National
Guard and Reserve units. Theyre out there. Theyre fighting.
Theyre developing great experience, great capabilities. I dont want
to lose that for the future. I want to be able to maintain that.
The last area I will mention is obviously an area that is extremely important. Its fundamental to our strategy, which are our
people. That, frankly, is the biggest strength we have in the United
States.
For all the weapons we have, for all the technology we have,
frankly, its the men and women in uniform that are the strongest
weapon we have for the future.
And so, we want to sustain the family assistance programs, the
programs for wounded warriors, the basic support programs for our
troops and their families. But at the same time, Ive got to focus
on some savings in the compensation area.
This is an area thats grown by 90 percent. And, frankly, we have
got to be able to find some cost constraints in that area. So its for
that reason, that, you know, when it came to military pay, we provide pay raises these next 2 years, but we try to limit those pay
raises in the out years in order to provide some limits.
HEALTHCARE COSTS

We also do the same thing with TRICARE costs. And I recognize

that thats sensitive, and controversial, but healthcare costs us almost $50 billion a year at the defense budget. Ive got to do something to control healthcare costs in the future.
Weve also looked at the idea of a retirement commission to look
at retirement provisions for the future. Wed like to grandfather,
obviously, benefits for those that are presently in the force, but we
do need to achieve savings in this area as well for the future.
So, thats the package. This is not easy. Its tough, and we need
your support. We need your partnership in trying to implement
this strategy. I know these cuts are painful, and the fact is, they
impact on all 50 States.
But there is no way you can cut a half of $1 trillion out of the
defense budget and not have an impact on States. Thats just a reality if you do it right.
So the key here is to try to do this in a way that relates to a
defense strategy. Thats important. The committees that have

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marked up our budget, in many ways, theyve accepted the recommendations weve made for investment changes, and we appreciate that.
But some of the committees have also made changes with regard
to our recommendations that were concerned about. Some of the
bills seek to reverse the decisions to eliminate aging and lower priority ships and aircraft.
My concern is that if these decisions are totally reversed, then
Ive got to find money somewhere in order to maintain this old
stuff, which has me literally in a situation where Ive got to hollow
out the force in order to do that.
Weve got to be able to retire what is aged and what we can
achieve some savings on.
The same thing is true, theres been some proposals to basically
not provide for the measured and gradual reductions in endstrength that weve proposed for the Army and the Marine Corps.
Again, if I have a large force, and I dont have the money to
maintain that large force, Im going to wind up hollowing it out because I cant provide the training, I cant provide the equipment.
So thats why, if were going to reduce the force, then Ive got to
be able to do it in a responsible way.
The last point I would make is with regard to overhead costs in
military healthcare and in compensation.
Again, I understand the concern about that, but if I suddenly
wind up with no reductions in that area, Ive got to reach some
place to find the money to maintain those programs. And that too,
somebodys going to pay a price for that.
Theres no free lunch here. Every low-priority program or overhead cost that is retained, will have to be offset in cuts in higher
priority investments in order to comply with the Budget Control
Act.
I recognize that theres no one in this subcommittee that wants
to hollow out the force or weaken our defense structure. So I would
strongly urge all of you to work with us to reach a consensus about
how we achieve our defense priorities recognizing your concerns.
Our job is to responsibly respond to what this Congress has mandated on a bipartisan basis with regard to reducing the defense
budget. And I need to have your help and your support to do this
in a manner that preserves the strongest military in the world.
SEQUESTRATION

Let me just say a few words about sequestration. Obviously, this

is a great concern. The doublingI mean, this would result in a
doubling of cuts, another $500 billion, that would have to be cut
through this kind of formulaic, meat-axe approach that was designed into that process.
And it would guarantee that we hollow out our force and inflict
severe damage on our national defense. I think you all recognize
that the sequester would be entirely unacceptable. And I really
urge both sides to work together to try to find the kind of comprehensive solution that would detrigger the sequester, and try to
do this way ahead of this potential disaster that we confront.
I know the members of this subcommittee are committed to
working together to stop the sequester, and I want you to know

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that we are prepared to work with you to try to do what is necessary to avoid that crisis.
The last point I would make is on fiscal year 2012. We have some
additional needs that have developed during fiscal year 2012. Just
to summarize a few.
With regard to fuel costs. Because of the increase in fuel costs,
were facing almost another $3 billion in additional costs with regard to that area. Obviously, if the price goes down, that will provide some relief, but right now, thats the number that were facing.
Weve also had the closure of these ground lines, the so-called
ground lines of communication (GLOCs) in Pakistan. And the result of that is that its very expensive because were using the
northern transit route in order to be able to drawdown our forces
and also supply our forces.
I think the amount is about $100 million a daya $100 million
a month because of the closure of those GLOCs.
Iron Dome, a system that were trying to provide for the Israelis,
is another additional cost that we would like to be able to provide.
And also, we have had to provide additional forces in the Middle
East because of the tensions in the gulf.
And so because weve increased both our naval and land forces
there, those are additional costs as well.
So weve got some unbudgeted needs that we would ask for your
support. Ill present to you an omnibus reprogramming request,
and we hope to work with you to resolve these issues in the current
fiscal year and do what the American people expect of all of us to
be fiscally responsible in developing the force we need, a force that
can defend the country and defend our Nation and support the men
and women in uniform that are so important to the strongest military in the world.
These last 2 weeks, I had the opportunity to travel throughout
Asia Pacific, and I consulted with a lot of our key allies and partners. I think theyre very receptive of the strategy that were proposing and are enthusiastic, certainly about our engagement in the
region.
PREPARED STATEMENT

And I think Ive been able to reassure our allies and partners,
that we have a strategy-based approach to dealing with national
security. I come from this institution of the Congress, and I have
great respect for you and for this institution.
And I look forward to a partnership here to try to develop the
approaches that are going to be necessary if were going to meet
our responsibilities to national security and fiscal responsibility at
the same time.
Thank you.
[The statement follows:]
PREPARED STATEMENT

OF

LEON E. PANETTA

Chairman Inouye, Senator Cochran, and members of the subcommittee. I appreciate the opportunity to appear before you to discuss the Presidents fiscal year 2013
budget. I also want to address the looming problems associated with sequestration
as well as our budgetary situation in fiscal year 2012.
But let me begin by first thanking you for your support for our servicemembers
and our military families, including your responsiveness to the urgent needs of our

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men and women in the battlefield over the last decade of war. Our brave men and
women, along with the Departments civilian professionals who support them, have
done everything asked of them and more.
DEFENSE STRATEGY REVIEW

The fiscal year 2013 budget request for the Department of Defense (DOD) was the
product of an intensive strategy review conducted by the senior military and civilian
leaders of the Department with the advice and guidance of President Obama. The
total request represents a $614 billion investment in national defenseincluding a
$525.4 billion request for the Departments base budget and $88.5 billion in spending for overseas contingency operations (OCO).
The reasons for this review are clear: First, the United States is at a strategic
turning point after a decade of war and substantial growth in defense budgets. Second, with the Nation confronting very large debt and deficits, the Congress passed
the Budget Control Act of 2011 (BCA), imposing limits that led to a reduction in
the defense budget of $487 billion over the next decade.
Deficit reduction is a critical national security priority in and of itself. We at the
Department decided that this crisis presented us with the opportunity to establish
a new strategy for the force of the future, and that strategy has guided us in making the budget choices contained in the Presidents budget. We are at an important
turning point that would have required us to make a strategic shift under any circumstances. The United States militarys mission in Iraq has ended. We still have
a tough fight on our hands in Afghanistan, but over the past year we have begun
a transition to Afghan-led responsibility for securityand we are on track to complete that transition by the end of 2014, in accordance with the commitments made
at Lisbon and reaffirmed last month at the North Atlantic Treaty Organization
(NATO) summit in Chicago. Last year, the NATO effort in Libya also concluded
with the fall of Qadhafi. And successful counterterrorism efforts have significantly
weakened al Qaeda and decimated its leadership.
But despite what we have been able to achieve, unlike past drawdowns when
threats have receded, the United States still faces a complex array of security challenges across the globe:
we are still a Nation at war in Afghanistan;
we still face threats from terrorism;
there is dangerous proliferation of lethal weapons and materials;
the behavior of Iran and North Korea threaten global stability;
there is continuing turmoil and unrest in the Middle East and North Africa;
rising powers in Asia are testing international relationships; and
there are growing concerns about cyber intrusions and attacks.
Our challenge is to meet these threats and at the same time, meet our responsibility to fiscal discipline. This is not an easy task.
To build the force we need for the future, we developed new strategic guidance
that consists of these five key elements:
First, the military will be smaller and leaner, but it will be agile, flexible, ready,
and technologically advanced.
Second, we will rebalance our global posture and presence to emphasize AsiaPacific and the Middle East.
Third, we will build innovative partnerships and strengthen key alliances and
partnerships elsewhere in the world.
Fourth, we will ensure that we can quickly confront and defeat aggression from
any adversaryanytime, anywhere.
Fifth, we will protect and prioritize key investments in technology and new capabilities, as well as our capacity to grow, adapt, and mobilize as needed.
STRATEGY TO FISCAL YEAR 2013 BUDGET

We developed this new strategic guidance before any final budget decisions were
made to ensure that the budget choices reflected the new defense strategy.
While shaping this strategy, we did not want to repeat the mistakes of the past.
Our goals were to maintain the strongest military in the world and to do our share
of deficit reduction, recognizing that no country maintains its military might if its
economy is weakened. We are determined to not break faith with troops and their
families, to not hollow out the force, to take a balanced approach to budget cuts,
and to put everything on the table. Throughout the review we made sure this was
an inclusive process, and General Dempsey and I worked closely with the leadership
of the Services and Combatant Commanders, and consulted regularly with Members
of Congress.

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As a result of these efforts, the Department is strongly united behind the recommendations we have presented to the Congress. Consistent with title I of the
Budget Control Act, this budget reflects $259 billion in savings over the next 5 years
and $487 billion over the next 10 years compared to the budget plan submitted to
the Congress last year. Under the 5-year budget plan, the base budget will rise from
$525 billion in fiscal year 2013 to $567 billion in fiscal year 2017. When reduced
war-related funding requirements are included, we expect total U.S. defense spending to drop by more than 20 percent over the next few years from its peak in 2010,
after accounting for inflation.
This is a balanced and complete package that follows the key elements of the
strategy and adheres to the guidelines we established. The savings come from three
broad areas:
First, efficiencieswe redoubled efforts to make more disciplined use of taxpayer dollars, yielding about one-quarter of the target savings.
Second, force structure and procurement adjustmentswe made strategy-driven
changes in force structure and procurement programs, achieving roughly onehalf of the savings.
Finally, compensationwe made modest but important adjustments in personnel costs to achieve some necessary cost savings in this area, which represents one-third of the budget but accounted for a little more than 10 percent
of the total reduction.
Changes in economic assumptions and other shifts account for the remainder of
the $259 billion in savings. Let me walk through these three areas, beginning with
our efforts to discipline our use of defense dollars.
MORE DISCIPLINED USE OF DEFENSE DOLLARS

If we are to tighten up the force, I felt we have to begin by tightening up the

operations of the Department. This budget continues efforts to reduce excess overhead, eliminate waste, and improve business practices across the Department. The
more savings realized in this area, the less spending reductions required for modernization programs, force structure, and military compensation.
As you know, the fiscal year 2012 budget proposed more than $150 billion in efficiencies between fiscal year 2012 and fiscal year 2016, and we continue to implement those changes. This budget identifies about $60 billion in additional savings
over 5 years. Across the military services, new efficiency efforts over the next 5
years include:
The Army proposes to save $18.6 billion through measures such as streamlining
support functions, consolidating information technology (IT) enterprise services,
and rephasing military construction projects.
The Navy proposes to save $5.7 billion by implementing strategic sourcing of
commodities and services, consolidating inventory, and other measures.
The Air Force proposes to save $6.6 billion by reducing service support contractors and rephasing military construction projects.
Other proposed DOD-wide efficiency savings over the next 5 years total $30.1 billion, including reductions in expenses in the Office of the Secretary of Defense and
the Defense agencies.
Additionally, we are continuing the initiative to improve the Departments buying
power by seeking greater efficiency and productivity in the acquisition of goods and
services. We are strengthening acquisition support to the warfighter, executing acquisitions more efficiently, preserving the industrial base, and strengthening the acquisition workforce. This budget assumes that these policies produce savings of $5.3
billion over the next 5 years.
In terms of military infrastructure, we will need to ensure that our current basing
and infrastructure requirements do not divert resources from badly needed capabilities.
As we reduce force structure, we have a responsibility to provide the most costefficient support for the force. For that reason, the President is requesting that the
Congress authorize the base realignment and closure (BRAC) process for 2013 and
2015. As someone who went through BRAC, I realize how controversial this process
can be for members and constituencies. And yet, it is the only effective way to
achieve infrastructure savings.
Achieving audit readiness is another key initiative that will help the Department
achieve greater discipline in its use of defense dollars. The Department needs
auditable financial statements to comply with the law, to strengthen its own internal processes, and to reassure the public that it continues to be a good steward of
Federal funds. In October 2011, I directed the Department to emphasize this initiative and accelerate efforts to achieve fully auditable financial statements. Among

12
other specific goals, I directed the Department to achieve audit readiness of the
Statement of Budgetary Resources for general funds by the end of calendar year
2014, and to meet the legal requirements to achieve full audit readiness for all Defense Department financial statements by 2017. We are also implementing a coursebased certification program for defense financial managers in order to improve
training in audit readiness and other areas, with pilot programs beginning this
year. We now have a plan in place to meet these deadlines, including specific goals,
financial resources, and a governance structure.
These are all critically important efforts to ensure the Department operates in the
most efficient manner possible. Together, these initiatives will help ensure the Department can preserve funding for the force structure and modernization needed to
support the missions of our force.
STRATEGY-DRIVEN CHANGES IN FORCE STRUCTURE AND PROGRAMS

It is obvious that we cannot achieve the overall savings targets through efficiencies alone. Budget reductions of this magnitude require significant adjustments
to force structure and investments, but the choices we made reflected five key elements of the defense strategic guidance and vision for the military.
Build a Force That is Smaller and Leaner, but Agile, Flexible, Ready, and Technologically Advanced
We knew that coming out of the wars, the military would be smaller. Our approach to accommodating these reductions, however, has been to take this as an opportunityas tough as it isto fashion the agile and flexible military we need for
the future. That highly networked and capable joint force consists of:
an adaptable and battle-tested Army that is our Nations force for decisive action, capable of defeating any adversary on land;
a Navy that maintains forward presence and is able to penetrate enemy defenses;
a Marine Corps that is a middleweight expeditionary force with reinvigorated
amphibious capabilities;
an Air Force that dominates air and space and provides rapid mobility, global
strike, and persistent intelligence, surveillance, and reconnaissance (ISR); and
National Guard and Reserve components that continue to be ready and prepared for operations when needed.
To ensure an agile force, we made a conscious choice not to maintain more force
structure than we could afford to properly train and equip. We are implementing
force structure reductions consistent with the new strategic guidance for a total savings of about $50 billion over the next 5 years.
These adjustments include:
gradually resizing the Active Army to 490,000, eliminating a minimum of eight
brigade combat teams (BCTs) and developing a plan to update the Armys brigade structure;
gradually resizing the Active Marine Corps to about 182,100, eliminating six
combat battalions and four Tactical Air squadrons;
reducing and streamlining the Air Forces airlift fleet by retiring all 27 C5As,
65 of the oldest C130s and divesting all 38 C27s. After retirements, the Air
Force will maintain a fleet of 275 strategic airlifters, and 318 C130sa number that we have determined is sufficient to meet the airlift requirements of the
new strategy, including the Air Forces commitment for direct support of the
Army;
eliminating seven Air Force Tactical Air squadronsincluding five A10 squadrons, one F16 squadron, and one F15 training squadron. The Air Force will
retain 54 combat-coded fighter squadrons, maintaining the capabilities and capacity needed to meet the new strategic guidance; and
retiring seven lower priority Navy cruisers that have not been upgraded with
ballistic missile defense capability or that would require significant repairs, as
well as retiring two dock landing ships.
The strategy review recognized that a smaller, ready, and agile force is preferable
to a larger force that is poorly trained and ill-equipped. Therefore, we put a premium on retaining those capabilities that provide the most flexibility across a range
of missions. We also emphasized readiness. For fiscal year 2013, the Department
is requesting $209 billion in the base budget for Operation and Maintenance, the
budget category that funds training and equipment maintenance among other aspects of operations. That represents an increase of 6 percent compared to the enacted level in 2012, even though the overall base budget will decline by 1 percent.
Striking the right balance between force structure and readiness is critical to our

13
efforts to avoid a hollow force, and we will continue to focus on this area to ensure
that we make the right choices.
Rebalance Global Posture and Presence To Emphasize Asia-Pacific and the Middle
East
The strategic guidance made clear that we must protect capabilities needed to
project power in Asia-Pacific and the Middle East. To this end, this budget:
maintains the current bomber fleet;
maintains the aircraft carrier fleet at a long-term level of 11 ships and 10 air
wings;
maintains the big-deck amphibious fleet; and
restores Army and Marine Corps force structure in the Pacific after the drawdown from Iraq and as we drawdown in Afghanistan, while maintaining persistent presence in the Middle East.
The budget also makes selected new investments to ensure we develop new capabilities needed to maintain our militarys continued freedom of action in face of new
challenges that could restrict our ability to project power in key territories and domains. Across the Services, this budget plan requests $1.8 billion for fiscal year
2013, and a total of $3.9 billion over the next 5 years, for enhancements to radars,
sensors, and electronic warfare capabilities needed to operate in these environments.
Other key power projection investments in fiscal year 2013 include:
$300 million to fund the next generation Air Force bomber (and a total of $6.3
billion over the next 5 years);
$1.8 billion to develop the new Air Force tanker;
$18.2 billion for the procurement of 10 new warships and associated equipment,
including two Virginia-class submarines, two Aegis-class destroyers, four littoral
combat ships, one joint high speed vessel, and one CVN21-class aircraft carrier. We are also requesting $100 million to develop the capability to increase
cruise missile capacity of future Virginia-class submarines;
$2.2 billion in fiscal year 2013 for the procurement of an additional 26 F/A18E/
F Super Hornet aircraft;
$1 billion in fiscal year 2013 for the procurement of 12 EA18G Growler aircraft, the Navys new electronic warfare platform that replaces the EA6B; and
$38 million for design efforts to construct an Afloat Forward Staging Base
planned for procurement in fiscal year 2014. This base can provide mission support in areas where ground-based access is not available, such as countermine
operations, Special Operations, and ISR.
Build Innovative Partnerships and Strengthen Key Alliances and Partnerships
The strategy makes clear that even though Asia-Pacific and the Middle East represent the areas of growing strategic priority, the United States will work to
strengthen its key alliances, to build partnerships, and to develop innovative ways
to sustain United States presence elsewhere in the world.
To that end, this budget makes key investments in NATO and other partnership
programs, including:
$200 million in fiscal year 2013 and nearly $900 million over the next 5 years
in the NATO Alliance Ground Surveillance system. This system will enable the
Alliance to perform persistent surveillance over wide areas in any weather or
light condition;
$9.7 billion in fiscal year 2013, and $47.4 billion over the next 5 years, to develop and deploy missile defense capabilities that protect the U.S. homeland
and strengthen regional missile defenses;
$800 million for the Combatant Commanders exercise and engagement program. Jointly with the State Department, we will also begin using the new
Global Security Contingency fund that was established at our request in the fiscal year 2012 legislation;
$401 million for the Medium Extended Air Defense System (MEADS). These
funds are necessary to complete the Proof of Concept program that was agreed
to between the United States, Italy, and Germany. Completing the Proof of Concept fulfills an important obligation to our international partners, lays the
groundwork for strengthened NATO air defense, and will provide demonstrated
technologies to enhance U.S. air defense capabilities in the future.
The new strategy also envisions a series of organizational changes that will boost
efforts to partner with other militaries. These include:
Allocating a U.S.-based brigade to the NATO Response Force and rotating U.S.based units to Europe for training and exercises;

14
Aligning an Army BCT with each regional Combatant Command to foster regional expertise; and
Increasing opportunities for Special Operations Forces to advise and assist partners in other regions, using additional capacity available due to the gradual
drawdown from the post-9/11 wars.
Ensure That We Can Confront and Defeat Aggression From Any AdversaryAnytime, Anywhere
The strategic guidance reaffirmed that the United States must have the capability
to fight more than one conflict at the same time. Still, the strategic guidance recognizes that how we defeat the enemy may well vary across conflicts.
This budget invests in space, cyberspace, long range precision-strike, and the continued growth of special operations forces to ensure that we can still confront and
defeat multiple adversaries even with the force structure reductions outlined earlier.
It also sustains the nuclear triad of bombers, missiles, and submarines to ensure
we continue to have a safe, reliable, and effective nuclear deterrent.
Even with some adjustments to force structure, this budget sustains a military
that is the strongest in the world, capable of quickly and decisively confronting aggression wherever and whenever necessary. After planned reductions, the fiscal year
2017 joint force will consist of:
an Army of more than 1 million Active and Reserve soldiers that remains flexible, agile, ready, and lethal across the spectrum of conflict, with 18 Divisions,
approximately 65 Brigade Combat Teams, 21 Combat Aviation Brigades, and
associated enablers;
a Naval battle force of 285 shipsthe same size force that we have todaythat
will remain the most powerful and flexible naval force on Earth, able to prevail
in any combat situation, including the most stressing anti-access environments.
Our maritime forces will include 11 carriers, 9 large deck amphibious ships (although we should build to 10 such ships in fiscal year 2018), 82 guided missile
cruisers and destroyers, and 50 nuclear-powered attack submarines;
a Marine Corps that remains the Nations expeditionary force in readiness, forward deployed and engaged, with 31 infantry battalions, 10 artillery battalions,
and 20 tactical air squadrons; and
an Air Force that will continue to ensure air dominance with 54 combat-coded
fighter squadrons and the current bomber fleet, with the Joint Strike Fighter
in production and the next-generation bomber in development. Our Air Force
will also maintain a fleet of 275 strategic airlifters, 318 C130s, and a new aerial refueling tanker.
Protect and Prioritize Key Investments, and the Capacity To Grow, Adapt, and Mobilize
The force we are building will retain a decisive technological edge, leverage the
lessons of recent conflicts, and stay ahead of the most lethal and disruptive threats
of the future.
To that end, the fiscal year 2013 budget:
provides $11.9 billion for science and technology to preserve our ability to leap
ahead, including $2.1 billion for basic research;
provides $10.4 billion (base and OCO) to sustain the continued growth in Special Operations Forces;
provides $3.8 billion for Unmanned Air Systems by funding trained personnel,
infrastructure, and platforms to sustain 65 USAF MQ1/9 combat air patrols
with a surge capacity of 85 by fiscal year 2016. We slowed the buy of the Reaper
aircraft to allow us time to develop the personnel and training infrastructure
necessary to make full use of these important aircraft. We also protected funding for the Armys unmanned air system Gray Eagle;
invests $3.4 billion in cyber activities, with several initiatives receiving increased funding relative to last year. The scale of cyber threats is increasing
and we need to be prepared to defeat these threats, mitigate the potential damage, and provide the President with options to respond, if necessary. We are investing in full spectrum cyber operations capabilities to address the threats we
see today and in the future. The Department strongly believes that congressional action is needed on cyber legislation and is supportive of the bipartisan
legislation introduced by Senators Lieberman, Collins, and Rockefeller; and
provides $1.5 billion to fund the Departments Chemical and Biological Defense
program.
At the same time, the strategic guidance recognizes the need to prioritize and distinguish urgent modernization needs from those that can be delayedparticularly
in light of schedule and cost problems. Therefore this budget identifies about $75

15
billion in savings over the Future Years Defense Plan (FYDP) resulting from canceled or restructured programs. Key modifications and associated savings over the
FYDP include:
$15.1 billion in savings from restructuring the Joint Strike Fighter by delaying
aircraft purchases to allow more time for development and testing;
$1.3 billion in savings from delaying development of the Armys ground combat
vehicle due to contracting difficulties;
$2.2 billion in savings from curtailing the Joint Land Attack Cruise Missile Defense Elevated Netted Sensor System (JLENS) due to concerns about program
cost and operational mobility;
$4.3 billion in savings from delaying the next generation of ballistic missile submarines by 2 years for affordability and management reasons; and
$0.8 billion in savings from delaying selected Army aviation helicopter modernization for 3 to 5 years.
We will also terminate selected programs, including:
the Block 30 version of Global Hawk, which has grown in cost to the point
where it is no longer cost effective, resulting in savings of $2.5 billion;
upgrades to High Mobility Multipurpose Wheeled Vehicles (HMMWVs); we will
focus our modernization resources on the joint light tactical vehicle, resulting
in savings of $900 million; and
the weather satellite program, because we can depend on existing satellites, resulting in savings of $2.3 billion.
We have also invested in a balanced portfolio of capabilities that will enable our
force to remain agile, flexible, and technologically advanced enough to meet any
threat. We will ensure that we can mobilize, surge, and adapt our force to meet the
requirements of an uncertain future. To that end, ground forces will retain the key
enablers and know-how to conduct long-term stability operations, and the Army will
retain more mid-grade officers and noncommissioned officers. These steps will ensure we have the structure and experienced leaders necessary should we need to
re-grow the force quickly.
Another key element is to maintain a capable and ready National Guard and Reserve. The Reserve component has demonstrated its readiness and importance over
the past 10 years of war, and we must ensure that it remains available, trained,
and equipped to serve in an operational capacity when necessary. We will maintain
key combat support capabilities and ensure that combat service support capabilities
like civil affairs are maintained at a high-readiness level. We will also leverage the
operational experience and institute a progressive readiness model in the National
Guard and Reserves in order to sustain increased readiness prior to mobilization.
In keeping with the emphasis on a highly capable reserve, this budget makes only
relatively modest reductions in the ground-force Reserve components. Over the next
5 years, the Army Reserve will be sustained at 205,000 personnel, the Army National Guard will marginally decrease from 358,200 to 353,200 personnel, and the
Marine Corps Reserve will sustain an end-strength level of 39,600 personnel. The
Navy Reserve will decrease from 66,200 to 57,100 personnel over the next 5 years.
Over the same span, the Air Force Reserve will decrease from 71,400 to 69,500 personnel, and the Air National Guard will decrease from 106,700 to 101,200 personnel.
Another key part of preserving our ability to quickly adapt and mobilize is a
strong and flexible industrial base. This budget recognizes that industry is our partner in the defense acquisition enterprise. A healthy industrial base means a profitable industrial base, but it also means a lean, efficient base that provides good value
for the taxpayers defense investments and increases in productivity over time.
ENSURING QUALITY OF THE ALL-VOLUNTEER FORCE

Now to the most fundamental element of our strategy and our decisionmaking
process: Our people. This budget recognizes that they, far more than any weapons
system or technology, are the great strength of our United States military. All told,
the fiscal year 2013 budget requests $135.1 billion for the pay and allowances of
military personnel and $8.5 billion for family support programs vital to the wellbeing of servicemembers and their families.
One of the guiding principles in our decisionmaking process was that we must
keep faith with our troops and their families. For that reason, we were determined
to protect family assistance programs, and we were able to sustain these important
investments in this budget and continue efforts to make programs more responsive
to the needs of troops and their families. Yet in order to build the force needed to
defend the country under existing budget constraints, the growth in costs of military
pay and benefits must be put on a sustainable course. This is an area of the budget

16
that has grown by nearly 90 percent since 2001, or about 30 percent above inflationwhile end strength has only grown by 3 percent.
This budget contains a roadmap to address the costs of military pay, healthcare,
and retirement in ways that are fair, transparent, and consistent with our fundamental commitments to our people.
On military pay, there are no pay cuts. We have created sufficient room to allow
for full pay raises in 2013 and 2014 that keep pace with increases in the private
sector. That means for 2013, we propose a pay increase of 1.7 percent for
servicemembers. However, we will provide more limited pay raises beginning in
2015giving troops and their families fair notice and lead time before changes take
effect. Let me be clear: Nobodys pay is cut in this budget nor will anyones pay be
cut in the future years of this proposal.
This budget devotes $48.7 billion to healthcarea cost that has more than doubled over the last decade. In order to continue to control the growth of these costs,
we are recommending increases in healthcare fees, copays, and deductibles to be
phased in over 4 to 5 years. None of the fee proposals in the budget would apply
to active-duty servicemembers, survivors of servicemembers who died on Active
Duty, or retirees who retired due to disability. Most of the changes will not affect
the families of Active-Duty servicemembersthere will be no increases in
healthcare fees or deductibles for families of Active-Duty servicemembers. Those
most affected will be retireeswith the greatest impact on working-age retirees
under the age of 65 still likely to be employed in the civilian sector. Even with these
changes, the costs borne by retirees will remain below levels in most comparable
private sector plansas they should be.
Proposed changes include:
further increasing enrollment fees for retirees under age 65 in the TRICARE
Prime program, using a tiered approach based on retired pay that requires senior-grade retirees with higher retired pay to pay more and junior-grade retirees
less;
establishing a new enrollment fee for the TRICARE Standard/Extra programs
and increasing deductibles;
establishing a new enrollment fee for the TRICARE-for-Life program for retirees 65 and older, also using a tiered approach;
implementing additional increases in pharmacy copays in a manner that increases incentives for use of mail order and generic medicine; and
indexing fees, deductibles, pharmacy copays, and catastrophic caps to reflect the
growth in national healthcare costs.
These changes are important. I am therefore disappointed that the Authorization
Committees did not support the proposed TRICARE fee initiatives that seek to control spiraling defense healthcare costs. We also feel that the fair way to address
military retirement costs is to ask the Congress to establish a commission with authority to conduct a comprehensive review of military retirement. But the President
and the Department believe that the retirement benefits of those who currently
serve should be protected by grandfathering their benefits. For those who serve
today, I will request there be no changes in retirement benefits.
FULLY SUPPORTING DEPLOYED WARFIGHTERS

The costs of overseas contingency operations (OCO) are funded separately from
the base budget in a stand-alone fiscal year 2013 request of $88.5 billion. That funding level represents a decrease of $26.6 billion from the fiscal year 2012 enacted
level.
This years OCO request, which ensures that deployed troops have all the financial resources they need to conduct their challenging missions, primarily supports
operations in Afghanistan, but also requests relatively small sums for the Office of
Security Cooperation in Iraq (OSCI) and the repair or replacement of equipment
redeploying from Iraq.
Our fiscal year 2013 OCO request includes funding for added personnel pay and
subsistence for deployed forces; communications; mobilizing Reserve component
units; transportation; supplies; deployment and redeployment of all combat and support forces; force sustainment; and sustainment and replenishment of war reserve
stocks.
For fiscal year 2013, we request $5.7 billion in funding for the Afghan National
Security Forces (ANSF). It is critically important that we maintain sufficient financial support to ANSF so that they can ultimately assume full security responsibility
across Afghanistan.
Much tough fighting lies ahead in Afghanistan, but the gradually improving situation permits the remainder of the United States surge force to redeploy by the end

17
of September 2012, leaving 68,000 United States troops in Afghanistan at that time.
The fiscal year 2013 OCO request assumes a continued level of about 68,000 troops
in Afghanistan. While future changes in troop levels may be implemented during
fiscal year 2013, those decisions will be based on advice from field commanders
about conditions on the ground.
In Iraq, OCO funding supports continued security assistance and cooperation with
Iraqi Security Forces through the OSCI in the areas of common interest, including
counterterrorism, counterproliferation, maritime security, and air defense. This
funding is critical for the United States to strengthen its long-term partnership with
Iraq. Additionally, to ensure that United States forces redeployed from Iraq are
ready and equipped for future operations, this funding replenishes equipment and
stocks for these forces.
A BALANCED PACKAGE

Members of the subcommittee, the fiscal year 2013 request is a carefully balanced
package that keeps America safe and sustains U.S. leadership abroad. As you take
a look at the individual parts of this plan, I encourage you to do what the Department has done: To bear in mind the strategic trade-offs inherent in any particular
budget decision, and the need to balance competing strategic objectives in a resource-constrained environment.
As the fiscal year 2013 budget request has worked its way through the relevant
Committees, I am pleased to note that many of our changes have been sustained.
In particular, most Committees have accepted a number of the investment changes
we recommended, which are consistent with our new defense strategy and the budgetary limits imposed by the Budget Control Act.
However, some Committees of Congress have not supported certain choices that
are critical to the long-term viability of a defense strategy that lives within the constrained resources of the Budget Control Act. For example, some Committee bills
are seeking to reverse decisions to eliminate aging and lower priority ships and aircraft. If these decisions are totally reversed, it would be harder to invest in newer,
multipurpose, and higher priority platforms for the future, and we would be burdening the services with excess force structure that would risk hollowing out the
force.
There has also been opposition to the measured and gradual reductions in end
strength we have proposed for the Army and Marine Corps. The Department has
made it clear that we prefer a smaller ready force to a larger force that lacks sufficient training and equipment to perform the mission assigned to it. If we are prevented from making the full-planned reductions in the size of our ground forces,
thats what well get.
Similarly, some bills would reverse our efforts to slow overhead costs, particularly
by slowing the growth of military healthcare costs. By making it harder to get these
costs under control, the Congress is making it more difficult to balance and maintain investments in readiness and equipment, which is essential to the overall
health of the All-Volunteer Force.
In reversing difficult decisions and restoring funds to those areas that achieve
necessary savings, the Congress risks upending the careful balance we have sought
to achieve in our strategy.
There is no free lunch here. Every low-priority program or overhead cost that is
retained will have to be offset by cuts in higher priority investments in order to
comply with the Budget Control Act.
I know that this subcommittee does not want to hollow out the force. Therefore,
I would strongly urge the Congress to work with us to reach a consensus about our
defense priorities, recognizing your concerns. Obviously, our job is to responsibly respond to what this Congress mandated, on a bipartisan basis, with regard to reducing the defense budget. We need your partnership to do this in a manner that preserves the strongest military in the world. This will be a test of whether reducing
the deficit is about talk or action.
Now that we have seen the sacrifice involved in reducing the defense budget by
almost half $1 trillion, I want to remind the Congress of its important responsibility
to make sure that we avoid sequestration. That would be a doubling of the cuts,
another roughly $500 billion in additional cuts that would be required to take place
through a meat-axe approach, and that we are convinced could hollow out the force
and inflict severe damage on our national defense. All of us recognize that sequester
would be entirely unacceptable, and both sides and both chambers in the Congress
must work urgently to find a compromise that will allow us to head off this disaster.

18
I know that the members of this subcommittee are committed to working together
to stop sequester, and to ensuring that our men and women in uniform have the
resources they need to perform the hard work of defending this country.
FISCAL YEAR 2012 BUDGET SITUATION

On that note, let me close by pointing to some difficult budgeting problems for
fiscal year 2012 that will require your help and support to solve. Our fiscal year
2012 budget was prepared several years ago. Changes in funding needs since then
have resulted in shortfalls and excesses in particular areas.
To start, we have a significant shortfall in fuel funding for fiscal year 2012. The
situation will improve if fuel prices remain at current lower levels, but the shortfall
will still be substantial.
There are also additional Army manpower costs due to greater Reserve mobilizations than expected, Navy OCO operating costs that are higher due to the need for
more ships than planned for Afghanistan support, Air Force flying hours that exceeded projections, and Army OCO transportation costs that are higher due to closures of ground lines of communications (GLOC) in Pakistan.
In terms of excesses, we know that our budgets for the Afghan Security Forces
Fund (ASFF), both for fiscal year 2011 and for fiscal year 2012, are higher than are
needed to provide full support to the Afghanistan National Security Forces.
We need the Congress to permit us to realign funds to meet our shortfalls. As a
start, on June 1 we asked for authority to move $1 billion from the category for
ASFF funding to the defense working capital fund. This will enable us to maintain
cash reserves while paying higher fuel costs.
Thank you for approving our request which represents a first step toward resolving our fiscal year 2012 budgetary problems. Remaining issues will be addressed by
an omnibus reprogramming request which we plan to submit for your review around
the end of June.
As part of our efforts to confront fuel costs and also enhance our war-fighting capabilities, we are looking to make our installations and operations more fuel efficient and to diversify our energy sources, including with alternative fuels. I oppose
efforts by the Congress to limit the Departments options for using alternative fuels.
These efforts could deprive commanders of the flexibility they need to meet tactical
and operational needs and make us more exposed to potential supply disruptions
and future price volatility of petroleum products.
I will work closely with you to resolve these issues for the current fiscal year, and
to do what the American people expect of their leaders: Be fiscally responsible in
developing the force for the futurea force that can defend the country, a force that
supports our men and women in uniform, and a force that is, and always will be,
the strongest military in the world.
Over the past 2 weeks, I had the opportunity to travel extensively throughout the
Asia-Pacific region, where I consulted with key Allies and partners and explained
our new defense strategy both publicly and privately. I was struck by the enthusiasm and the support for Americas continued engagement in that region, and the
reassurance that our Allies and partners felt by the strategy-based approach we are
taking to our national security.
This trip has convinced me that we are on the right track, but I recognize that
we are still at the very beginning of a long-term process that will unfold over the
next decade and that we must continue in future budget requests.
With our fiscal year 2013 budget, we have laid the groundwork to build the military we need for the future. But we need to work with the Congress to execute this
strategy, and that means implementing the proposals we have presented this year,
and pushing ahead with the hard work of maintaining the strongest military in the
world and meeting our fiscal responsibilities.

Chairman INOUYE. Mr. Secretary, I thank you for your candid

and painful testimony. May I now call upon General Dempsey.
STATEMENT OF GENERAL MARTIN E. DEMPSEY, CHAIRMAN, JOINT
CHIEFS OF STAFF

General DEMPSEY. Thank you, Chairman, Senator Cochran, and

distinguished members of the subcommittee: Thank you for this opportunity to discuss the Presidents defense budget proposal for fiscal year 2013.
This budget represents a responsible investment in our Nations
security. It maintains our militarys decisive edge, and it sustains

19
Americas global leadership. Moreover, it keeps faith with the Nation and the true source of our military strength which is, of
course, Americas sons and daughters who serve in uniform.
Id like to open with a few words about them and their accomplishments. In just this past year, our soldiers, sailors, airmen, and
marines further crippled al Qaeda. They brought to a close more
than 20 years of military operations in and over Iraq.
They continued the steady transition of security responsibility in
Afghanistan. They helped protect the Libyan people from a regimes brutality, and they helped Japan recover from a tragic natural disaster.
They also worked professionally and quietly behind the scenes
defending against cyber threats, sustaining our nuclear deterrent
posture, and working with allies and partners around the globe to
build capacity and prevent conflict.
They didnt just do it last year. Theyve been doing it year after
year after year. During a decade of continuous combat, our service
men and women and their families have persevered and prevailed.
It is a genuine pleasure and honor to serve with each and every
one of them. They remain a great source of pride for our Nation.
We need to keep faith with them just as they work to keep faith
with the Nation.
DEFENSE BUDGET

One way to do this is by making sure our defense budget is informed by a real strategy. This past January, we released a new
defense strategy that reflects the lessons of war and anticipates a
more competitive security environment in the future.
It also acknowledges the realities of the new fiscal environment.
It sets priorities for investment and it establishes a strategic focus.
This budget resources that strategy.
It ensures we retain our conventional overmatch while divesting
capabilities not required in the Active Force or at all. It takes advantage of emerging capabilities as the Secretary said such as Special Operating Forces, intelligence, and cyber.
It restores versatility and readiness. Overall, its an important
stepping off point on our path toward the joint force we assess we
will need in 2020, a military that is always ready to provide options for the Nation.
Keeping faith also means appropriate compensation for our
troops. This budget proposes modest reforms to military pay and
benefits. However, it does not place the burden of budget cuts on
the shoulders of our men and women in uniform.
There are no freezes or reductions in pay, and there is no decrease in the quality of healthcare received by our active-duty
members and medically retired wounded warriors.
That said, we cant ignore some hard realities. We need practical
reform to deal with escalating personnel costs, particularly in
healthcare. We must make our healthcare system more sustainable. Otherwise, we risk both the quality and the continuity of
care. We can ensure its viability in ways that are fair and modest.
Last, keeping faith also means managing risk to our interests
and to our institutions. To be sure, we are assuming some risk in
this strategy. All strategies in all budgets that resource them have

20
to accept some risk. That risk is not in what we can do, but in how
much we can do and how often.
The budget helps buy down that risk by investing in our people
and in the joint capabilities we need most. We have achieved balance in this budget.
Keep in mind, please, that this is a budget for a joint force. It
should not be thought of as a set of separate service budgets but
as a comprehensive and carefully devised set of choices; choices
that reflect the right mix among force structure, modernization,
readiness, pay, and benefits.
Different choices will produce a different balance. So before giving us weapons we dont need, or giving up on reforms that we do
need, Id only ask you to make sure its the right choice, not for our
Armed Forces but for our Nation.
SEQUESTRATION

Sequestration is absolutely certain to upend this balance. It

would lead to further end-strength reductions, the potential cancellation of major weapon systems, and the disruption of global operations.
We cant yet say precisely how bad the damage would be, but it
is clear that sequestration would risk hollowing out our force and
reducing its military options available to the Nation.
We would go from being unquestionably powerful everywhere to
being less visible globally, and presenting less of an over match to
our adversaries. And that would translate into a different deterrent
calculus, and potentially therefore, increase the likelihood of conflict.
PREPARED STATEMENT

In closing, I offer my sincere thanks to this subcommittee and to

the entire Congress of the United States. Thank you for keeping
our military strong.
Thank you for taking care of our military family, for supporting
those who serve, who have served, and who will serve, I know you
share my pride in them. I look forward to your questions.
[The statement follows:]
PREPARED STATEMENT

OF

GENERAL MARTIN E. DEMPSEY

Chairman Inouye, Senator Cochran, and distinguished members of the subcommittee: It is my privilege to update you on our Armed Forces and the Presidents
budget proposal for fiscal year 2013. The context for this years posture testimony
is unique. Our military has transitioned many of our major operations. We have
new defense guidance that sets strategic priorities. And we are facing real fiscal constraints and an increasingly competitive security environment. The Presidents proposed fiscal year 2013 defense budget accounts for these realities. It provides a responsible investment in our Nations current and future security.
GLOBAL MILITARY OPERATIONS

Today, our Armed Forces stand strong. We are proud of the performance and accomplishments of our men and women in uniform over the past year. They have carried out far-ranging missions with much success. They have defended our homeland,
deterred aggression, and kept our Nation immune from coercion. And despite a decade of continuous combat operations, our troops and their families remain resilient.
Our U.S. Forces in Iraq completed their mission in December. More than 20 years
of military operations in and over Iraq came to a conclusion. The security of Iraq
is now the responsibility of the Iraqi people, leaders, and security forces. We have

21
transitioned to a normal military-to-military relationship. Diplomats and civilian advisors are the face of the United States in Baghdad. To be sure, Iraq still faces challenges to its future. But as we look to that future, we will continue to build ties
across Iraq to help the people and institutions capitalize on the freedom and opportunity we helped secure.
In Afghanistan, we are seeing the benefits of the surge in combat forces begun
in early 2010. The security situation is improving. The Taliban are less capable,
physically and psychologically, than they were 2 years ago. Afghan and International Security Assistance Forces (ISAF) have wrested the initiative and momentum from them in much of the country. The Taliban, however, remain determined
and continue to threaten the population and the Government. Combat will continue.
Key to long-term stability in Afghanistan is the development and sustainability
of the Afghan National Security Forces (ANSF). In 2011, the Afghan National Army
grew by 18 percent. The Afghan National Police grew by 20 percent. These forces,
combined with the ever-more-capable Afghan local police, are steadily assuming responsibility for Afghan security. The process of transition began last July, and after
nearly completing the second of five tranches of transition, Afghan security forces
are now responsible for the day-to-day security of almost one-half of Afghanistans
population.
Developing the ANSF, degrading insurgent capabilities, and turning over responsibilities have allowed us to begin a measured draw down of our forces in Afghanistan. We withdrew more than 10,000 of the surge troops and will withdraw the remaining 23,000 by the end of this summer. By that time, we expect the ANSF to
achieve their initial operating capability and to be responsible for securing nearly
75 percent of the Afghan population. They are on track to meet the goal of assuming
lead for security in mid-2013 and full responsibility for security throughout Afghanistan by the end of 2014.
Sustaining progress in Afghanistan requires dealing with some significant challenges. The ANSF and other national and local government institutions require further development. Corruption remains pervasive and continues to undermine the capacity and legitimacy of government at all levels. Insurgent sanctuaries in Pakistan
remain largely uncontested. And ultimately, much more work remains to achieve
the political solutions necessary to end the fighting in Afghanistan.
The recent North Atlantic Treaty Organization (NATO) Summit in Chicago affirmed an international commitment to dealing with these challenges. Together, we
will work to strengthen Afghan institutions through the end of 2014. And 2015 will
mark the beginning of a decade-long commitment to solidify our relationship with
and support to the Afghan Government and people.
Our military has been vigilant and active in other areas and with other missions
to keep America and our allies safe. We decimated al Qaeda and pushed this terrorist network decidedly closer to strategic defeat. We supported NATO in its
United Nations (UN) mission to protect civilians in Libya, allowing them to end
Muammar Qaddafis tyrannical rule. We responded quickly to the devastating earthquakes and tsunami that struck Japan, saving lives and acting on our commitment
to this key ally. We fended off cyber intrusions against our militarys computer networks and systems. And we helped counter aggression and provocation from Iran
and North Korea.
A TIME OF TRANSITION

While our military continues to capably and faithfully perform a wide array of
missions, we are currently in the midst of several major transitions. Any one of
them alone would be difficult. Taken together, all three will test our people and our
leadership at every level.
First, we are transitioning from a war-time footing to a readiness footing. With
the end of our operations in Iraq and Libya and the ongoing transition of security
responsibilities in Afghanistan, our troops are steadily returning home. From a peak
of more than 200,000 troops deployed to combat 2 years ago, we have fewer than
90,000 today. This shift cannot lead us to lose focus on on-going combat operations.
But, it does mean we must give attention to restoring our readiness for full-spectrum operations. We need to reset and refit, and in many cases replace, our wartorn equipment. We need to modernize systems intentionally passed over for periodic upgrading during the last decade. We must retrain our personnel on skills that
may have atrophied. And, we will have to do all of this in the context of a security
environment that is different than the one we faced 10 years ago. We cannot simply
return to the old way of doing things, and we cannot ignore the lessons we have
learned. As described in the Departments recently released strategic guidance, we

22
should adjust our missions, our posture, and our organizational structure in order
to adapt to ever evolving challenges and threats.
Second, our military is transitioning to an era of more constrained resources. The
days of growing budgets are gone, and as an institution we must become more efficient and transparent. We must carefully and deliberately evaluate trade-offs in
force structure, acquisition, and compensation. We must make the hard choices,
focus on our priorities, and overcome bureaucratic and parochial tendencies. In sum,
we must recommit ourselves to being judicious stewards of the Nations resources.
Third, tens of thousands of our veteransand their familiesare facing the transition to civilian life. Many enlistments are coming to their normal conclusion, but
we are also becoming a leaner force. As we do this, we must help our veterans find
education opportunities, meaningful employment, and first-class healthcare. We
must pay particular attention to those bearing the deepest wounds of war, including
the unseen wounds. We must help those who have given so much cope withand
where possible, avoidsignificant long-term challenges such as substance abuse, divorce, depression, domestic violence, and homelessness. We must reverse the disturbing, continuing trend of increasing suicides. Addressing these issues is not the
exclusive responsibility of the Services or veterans organizations. How we respond,
as a military community and as a Nation, conveys our commitment to our veterans
and their families. It will also directly affect our ability to recruit and retain our
Nations best in the future.
I have outlined several priorities for the Joint Force to help us anticipate and
navigate the challenges these transitions present. We will maintain focus on achieving our national objectives in our current conflicts. We will begin creating the military of our futurethe Joint Force of 2020. We will also confront what being in the
Profession of Arms means in the aftermath of war. And above all else, we will keep
faith with our military family. In doing all these things, we will provide an effective
defense for the country and strengthen the militarys covenant of trust with the
American people.
A RESPONSIBLE INVESTMENT

The Presidents fiscal year 2013 Department of Defense base budget of $525 billion and overseas contingency operations (OCO) budget of $88 billion represent a responsible investment in our Nations security. The decisions underlying them flow
from the strategic guidance the Department of Defense issued in January. This
guidance set priorities for assessing our programs, force structure, and spending in
the context of a persistently dangerous and increasingly competitive security environment. With those priorities in mind, the budget proposal strikes an appropriate
and necessary balance between succeeding in todays conflicts and preparing for tomorrows challenges. It accounts for real risks and real fiscal constraints, marrying
versatility with affordability.
The tradeoffs were complex, and the choices were tough. They will produce $259
billion in savings over the next 5 years and a total of $487 billion over the next
10 years. This savings does not portend a military in decline. Rather, this budget
will maintain our militarys decisive edge and help sustain Americas global leadership. It will preserve our ability to protect our vital national interests and to execute
our most important missions. Moreover, it will keep faith with the true source of
our militarys strengthour people.
The merits of this budget should be viewed in the context of an evolving global
security environment and a longer term plan for the Joint Force. Coming on the
heels of a decade of war, this budget begins the process of rebalancing our force
structure and our modernization efforts and aligns them with our strategy. Essentially, we are developing today the Joint Force the Nation will need in 2020, and
our plans to build this force will unfold over the course of several budget cycles. This
budget is the first stepa down payment. If we fail to step off properly, our recovery
will be difficult, and our ability to provide the Nation with broad and decisive military options will diminish.
It is worth addressing head-on some of the major changes we are planning. These
changes must be viewed in the context of our evolving force. They represent a comprehensive package of decisions that strike a careful balance. They are not, and cannot be viewed as, individual, isolated measures. In all cases, needed capabilities are
preserved or, when necessary, generated, through one or several programs.
This budget makes critical investments in our future force. Certain specialized capabilities, once on the margins, will move to the forefront. Networked special operations, cyber, and intelligence, surveillance, and reconnaissance will become increasingly central.

23
Of these, cyber represents both a potent capability and real vulnerability. The
threats emanating from cyberspace have evolved faster than many could have imagined. This budget allows for us to expand many of our nascent cyber capabilities
and to better protect our defense networks. Similarly, bipartisan cyber legislation
under consideration in the Senate is a good first step in developing protection for
our Nations critical infrastructure. With much work to be done, we look forward
to working on cyber with agencies across the Government and with our allies and
partners.
While some additional capabilities for our Joint Force will be needed, others will
not. The budget divests some outdated ships, planes, and equipment, particularly
single-function systems. Each year that we delay retiring unneeded systems adds
several years of additional costs. And, it hampers our ability to achieve the desired
mix of military capabilities.
Moreover, we will no longer be sized for large-scale, prolonged stability operations.
As a result, we expect to draw down the Army from 562,000 to 490,000 by the end
of fiscal year 2017, and the Marine Corps from more than 202,100 to 182,100 by
the end of fiscal year 2016. Some of this reduction was planned several years ago
when the Congress authorized temporary end strength increases to support our operations in Iraq and Afghanistan.
In making ourselves leaner, we will not make the mistakes of previous draw
downs. We will not retain organizational structures that lack the people, training,
and equipment necessary to perform the assigned mission. We will be realistic about
the organizations we keep, while also maintaining our ability to reconstitute and
mobilize forces. This means retaining capacity in our Reserve components and our
industrial base. We will maintain the Army Reserve end-strength at 205,000 and
reduce the Army National Guard by only 5,000 down to 353,200. The Marine Corps
Reserves will be retain their current strength.
Another major concern among our troops, their families, retirees, and with the
American public is military compensation and benefits. I want to make it clear that
cuts in spending will not fall on the shoulders of our troops. There are no proposed
freezes or reductions in pay. There is no change to the quality of healthcare our active-duty members and medically retired wounded warriors receive. But we cannot
ignore some hard realities. Pay and benefits are now roughly one-third of defense
spending. Pay will need to grow more slowly in the future. We are also proposing
a commission to review of military retirement.
To control the growth of healthcare costs, we are also recommending changes to
TRICARE. These adjustments include modest, new or phased-in increases in
healthcare fees, copays, and deductibles largely for our retireesbut not our activeduty servicemembers. These increases would help ensure TRICARE remains one of
the finest medical benefits in the country. Each year we delay addressing rising
healthcare costs puts further strain on readiness and modernization which are critical to the health of the future force.
The result of these changes will be a Joint Force that is global and networked,
that is versatile and innovative, and that is ably led and always ready. This force
will be prepared to secure global accesseven where it is contestedand to respond
to global contingencies. We will be a military that is able to do more than one thing
at a timeto win any conflict, anywhere.
Overall, these changes value both the demands of military service and our duty
to be good stewards of the Nations fiscal resources. They will sustain the recruitment, retention, and readiness of the talented personnel we need. Most importantly,
they will sustain our enduring commitment to our troops and their familieswe
must never break faith with them. I want to note, however, that keeping faith with
our service men and women is not just about pay and benefits. It is also about ensuring we remain the best-trained, best-equipped, and best-led force in the world.
The last, and perhaps most critical issue, is risk. This budget and the strategy
it supports allow us to apply decisive force simultaneously across a range of missions and activities around the globe. But like all strategies, it also accepts some
risk. The primary risks lie not in what we can do, but in how much we can do and
how fast we can do it. The risks are in time and capacity. We have fully considered
these risks, and I believe they are acceptable. In fact, we will face greater risk if
we do not change from our previous approaches. I am convinced we can properly
manage this risk by ensuring we keep the force in balance, invest in new capabilities, and preserve strong Reserve components.
Our ability to manage this risk would be undermined by changes to the budget
that disrupt its carefully crafted balance. Sequestration would do this. It could have
serious effects on our readiness and disrupt essential programs and contracts. We
cannot predict precisely how bad the damage would be, but it is clear that sequestration would reduce the military options available to the Nation.

24
CONCLUSION

In the upcoming year, our Armed Forces will build on the past years achievements, adapt to emergent challenges, seize new opportunities, and provide for our
common defense. We will continue to face threats to our security, whether from aggressive states or violent non-state actors. Our Joint Force will be ready, and our
response will be a source of pride for the American people. In all of our efforts, we
will aim to maintain strength of character and professionalismat the individual
and institutional levelthat is beyond reproach.
As we embark on this critical new course, we will need Congresss support to help
us build the Joint Force the Nation needs and to strengthen our relationship with
the American people. As I stated before, this budget and the choices that underlie
it should be understood in the context of the comprehensive, carefully balanced,
multiyear plan they support. We ask the Congress to support this budget while
working to avoid the deep cuts that sequestration would impose.
I thank this subcommittee, and the entire Congress, for all you have done to support our men and women under arms and their families. Your resolute attention to
their needs and to our security has been both invaluable and greatly appreciated.

Chairman INOUYE. Thank you very much.

Mr. Secretary, your description of sequestration I believe is a
candid, but frightening one. Youve indicated that you would reduce
training at a time when you should be increasing training.
It would mean deferral of maintenance of equipment, and its
getting pretty bad. You have fewer purchases of aircraft and ships.
Theres something else you didnt mention, and Id like to have
your comment on that.
This sequestration, coupled with projected discretionary defense
spending, could add 1 percent to the national unemployment rate
from job losses in Government, military, and the private sector
within the defense industrial base.
Does that description make sense?
Secretary PANETTA. Mr. Chairman, I think that is the estimate
that weve seen in terms of the impact that would have.
Now, you know, again, I just stress, look, the Defense Department is not a jobs program. Its a program to defend the Nation.
But clearly, that kind of sequestration cut across the board would
have a serious impact not only on men and women in uniform but
on our personnel and the contractors who serve the Defense establishment.
Chairman INOUYE. When you speak of deferral of maintenance of
equipment, can you give us something beyond that?
SEQUESTRATION

Secretary PANETTA. Yes, let me have Bob Hale, our comptroller,

speak to that.
Mr. HALE. Mr. Chairman, we havent done a detailed plan, but
I think one of the options we would have to look at is cutbacks in
depot maintenance and that would mean we would push out the
availabilities of ships, for example, or planes.
We would try to do it in a sensible manner, but I think it inevitably would delay some of the maintenance activities. I cant give
you details, but I think thats an almost inevitable result of sequestration.
Secretary PANETTA. I mean, the way the formula works under sequestration is it takes a percentage across the board out of every
area of the Defense budget. And it means that, you know, its almost about a 20-percent cut in a weapons system.

25
It would be a 20-percent cut with regard to training equipment.
It would impact on every area of the Defense budget. Thats the
way it was designed. It was designed as a meat axe. It was designed to be a disaster, because the hope was, because its such a
disaster, that the Congress would respond and do what was right.
And so Im just here to tell you, yes, it would be a disaster.
Chairman INOUYE. Now, the across-the-board cut that youve indicated will not impact upon pay and health programs. Anything
else?
Secretary PANETTA. It would.
Mr. HALE. The President has the authority, Mr. Chairman, to exempt military personnel. Hell have to decide whether he does that.
If that were the case, then it wont affect military personnel.
But the other accounts would have to be cut by larger amounts
so that the total remains the same. It would affect our ability to
pay healthcare. Its in a separate account. And as the Secretary
said, it gets its meat-axe share of this cut, and we would face a serious problem of potentially not being able to pay all our TRICARE
bills, for example.
General DEMPSEY. Mr. Chairman, could I add something?
Chairman INOUYE. Please do.
General DEMPSEY. Because its important also to note that overseas contingency operations (OCO) is now subjected to sequestration. That would roughly be about $8 billion. And of the $88 billion
or so, $88.5 billion that weve requested to sustain our operations
globally, mostly in the gulf region.
But we have to fund that. So that money will have to be taken,
will have to come to you for some reprogram activity to move
money from base to cover those war-related costs.
That in combination with the potential freeze in the manpower
account, in other words, exempting manpower, means that a service chief, and I was a service chief, can only go back to find this
money to about three places, training, maintenance, and modernization.
Thats it. Theres no magic in the budget at that point. And those
three accounts will be subjected to all of the cuts mandated by sequestration.
Mr. HALE. May I add one more point, Mr. Chairman?
I would not look at reprogramming as a way to solve this problem. We have some legal limits. Unless you change them on the
amount we can reprogram, and we wouldnt have the authority to
offset all of those changes, at least not readily, in OCO, without
some major changes.
So we could do some, but theyll be very little flexibility if this
goes into play or into effect as its currently designed.
Chairman INOUYE. Thank you very much.
Before I call upon my colleagues, Id like to note that because of
the good attendance, we will have to limit the questioning period
to 5 minutes.
With that, Senator Cochran.
SHIPS

Senator COCHRAN. Mr. Chairman.

26
Let me ask you, Mr. Secretary, what your impression is of the
need for amphibious ships?
Weve heard that the Navy and Marine Corps have determined
a minimum force of 33 amphibious warships is the limit of acceptable risk in meeting the amphibious force requirement.
Whats your assessment of the risk that we are assuming, if any,
with our current shipbuilding plan as proposed and requested for
funding by the Department?
Secretary PANETTA. Ill ask General Dempsey to comment as
well.
But one of the things Im really trying to do is to maintain our
industrial base in the Defense Department. If we lose more shipyards, if I lose, more of the industry that supports our Defense Department, it makes it very difficult to mobilize in the future.
And so my goal is to try to design a budget here that maintains
the shipyards that we have, that maintains the industrial base that
supports our defense system.
On the amphibs, the reason theyre important is because of the
agility issue that I talked about, because we are going to have a
smaller force. These ships allow us to be very agile, to be quickly
deployable, to be able to move quickly if we have to.
And thats the reason that we want to maintain those as part of
our Defense structure.
General DEMPSEY. And just to add, Senator, the number that you
cited as based on the existing war plans and a particular phase in
which the amphibious warship capability is under most stress.
And what were doing as a result of our defense strategy is were
opening up our operation plans in concept format (CONPLANs) or
our operation plans (OPLANs) to look at the assumptions we made,
and to see if we can adjust the way we conduct operations in order
to mitigate that risk.
And at this point, the commandant and I are content that the
budget proposal and the number of amphibs in that budget proposal are adequate to the task. But it means well have to adjust
the way in which we conduct operations.
Senator COCHRAN. Well, theres a suggestion that the current 30year shipbuilding plan projects an inventory that will fall to 28
ships in fiscal year 2015.
And I wonder, General, if this is below the level required by the
Department, and whether or not this is an increase in the assumption of risk? Do we need to revise that upward? What do you suggest we do when we review the requirements being submitted by
the Marine Corps and the Navy?
General DEMPSEY. What Id ask to do, Senator, is take that question for the record, because there is a bit of it that would cross over
into classified information related to war plans, but Id be happy
to answer that for you.
[The information follows:]
Each year, the combatant commanders submit force requirements to my staff,
which include capabilities that reside in all Services. Some of these requirements
routinely exceed the Services capacity to meet them. Within the Navy, this includes
not only demand for amphibious platforms, but also aircraft carriers, cruiser/destroyers, coastal patrol boats, and frigates. The strategic risk associated with these
capacity shortfalls is balanced among the combatant commanders based upon Secretary of Defense policy and guidance, which reflect the National Military Strategy.

27
Specific to the issue of amphibious ship capacity, the Navy remains committed to
providing 30 operationally available amphibious ships to meet Naval amphibious
ship demand. With some risk, 30 amphibious landing ships can support a two-Marine Expeditionary Brigade (MEB) forcible entry operation. This force accepts risk
in the arrival of combat support and combat service support elements of the MEB,
but this risk is appropriately balanced with the risk in a wide range of other important warfighting requirements within todays fiscal limitations.
Navy can achieve this operational availability goal by sustaining an inventory of
about 32 amphibious ships in the mid- to long-term. The 32-ship amphibious force
being procured to meet this need will optimally be comprised of 11 landing helicopter assault (LHA/D), 11 landing platform/dock (LPD) 17 and 10 landing ship,
dock (LSD). To support routine forward deployments of Marine Expeditionary Units
(MEUs), the amphibious force will be organized into nine, three-ship CONUS-based
Amphibious Ready Groups (ARGs), and one four-ship ARG based in Japan, with an
additional big-deck amphibious ship available to support contingency operations
worldwide. Two LSDs will be taken out of commission and placed in reserve status
allowing Navy to reconstitute an 11th ARG as required in the future, or to build
up the number of ships in the active inventory, if necessary.

Senator COCHRAN. Thank you. Thank you, Mr. Chairman.

Chairman INOUYE. Thank you very much. Senator Leahy.
Senator LEAHY. Thank you, Mr. Chairman.
Secretary Panetta and General Dempsey and Mr. Hale, thank
you for being here. I appreciate the chance we had to talk before
the hearing.
One thing I didnt mention then was something youre well aware
of, that during the last 10 years, weve depended more than ever
on our Guard and Reserve.
And, Secretary Panetta, I appreciate what you said during your
testimony. I know we could never have supported two simultaneous
wars without men like you.
General Dempsey, anytime Ive visited areas where were in combat, you dont see a difference between the Active Guard and Reserve. Theyre all out there doing their job, putting their lives on
the line.
AIR FORCE BUDGET

I think your strategies echo this reality from the Presidents

guidance in the last Quadrennial Defense Review (QDR). As a result, it surprised many of us in the Congress, including Senator
Graham and I as co-chairs of the Guard caucus, when the Air Force
presented a fiscal year 2013 budget plan that disproportionately
cut the Guard.
I know there will be cuts and we all understand that, but it appeared here that you were going after your least expensive manpower to save money. That did not make a lot of sense, especially
since manpower costs are more and more of the defense budget as
you said.
So I dont know how you shrink the Guard and maintain a ready
and capable force. So my question is, does DOD stick with its earlier strategies to increasingly depend on the Guard and Reserve, or
is there an alternative?
Because the Air Force budget does not appear to follow that idea.
Secretary Panetta.
Secretary PANETTA. Senator, you know, again, what the Air
Force was asked to do is based on the new strategy, try to develop
an approach that provided a kind of multimission support for the
force.

28
And, as a result of that, made decisions with regards to some
areas that could be reduced in order to achieve obviously the savings that we were required to achieve.
I recognize, you know, the controversy involved here because it
impacts on constituencies, it impacts on the Guard.
Senator LEAHY. Im afraid it impacts on readiness too. Thats my
biggest concern.
Secretary PANETTA. Yes, I understand that.
But, you know, obviously, we dont want to take it out of the Active Force because that is a force thats there ready to deploy quickly.
What Ive suggested is to try to see if theres a way that we can
work to provide some restoration. So I think I suggested putting
some additional 130s back in place to try to assist some of these
areas with regards to the impact that might be there.
Let me just say this for the record. Im fully prepared to work
with this subcommittee and to work with the staff of this subcommittee to try to see if theres a way to do this that can minimize the impact, but at the same time, hopefully achieve some of
the necessary savings that we have to do in order to achieve it.
Senator LEAHY. I hope you will. And youve worked with Senator
Graham and me in the past on these issues. I know we can again.
On another matter related to the budget, I was one of those on
the subcommittee who opposed the Iraq war from the very start.
President Obama also did. I opposed it because I didnt think it
was the right decision for our national security. And we basically
ran that war on a credit card.
Now were making decisions how we address the national deficit.
It is not just sequestration. We voted earlier, the majority of us did,
that sequestration should happen only if we were unable to reach
consensus on deficit reduction.
The understanding was we would put everything on the table.
But now we find people who are calling for more military action in
other parts of the world. At the same time, they do not want to
consider any way of paying for it, unlike what weve always done
in the past.
What would be the impact of going to war again without committing to pay for that war with upfront taxes, something we did not
do in either Iraq or Afghanistan, for the first time in the history
of the country?
Secretary PANETTA. Well, obviously, if we repeated the mistake
of not paying for the war that we decide to engage in, whatever
that might be, the result would be that you would simply add more
to the deficit and to the debt of this country for the future. You just
put that burden on our kids for the future.
And, you know, look, I think we always have to be careful when
you make the decision to put our men and women in uniform into
harms way. Thats number one.
But number two, if that decision is made, then I think for the
sake of the country, its important that we recognize the costs that
are involved and that, frankly, all of us bear some responsibility to
pay those costs if were willing to engage in war.
Senator LEAHY. Thank you very much. Thank you, Mr. Chairman.

29
Chairman INOUYE. Thank you.
Senator Hutchison.
Senator HUTCHISON. Thank you, Mr. Chairman. And thank you
for your service, all three of you.
NORTH ATLANTIC TREATY ORGANIZATION

Secretary Panetta, since the end of the cold war, North Atlantic
Treaty Organization (NATO) has grown from 16 to 28 members,
and yet we know that the threat of a Soviet invasion into Europe
has virtually disappeared, with only five alliance members spending the obligatory standard of 2 percent of their Nations gross domestic product (GDP) on defense.
And several countries as we know refused to participate in combat assignments or limit what they will do.
Were contributing 23 percent of the military construction
(MILCON) for NATO which is approximately $254 million this year
alone. And then virtually the same amount of percent of expenditures for operations of NATO.
My question is, are you looking at the NATO alliance and determining if it is serving the function for which it was intended, and
if there is a commensurate effort by all of the members? Or whether, perhaps, we are paying more than our fair share for what we
are getting in return?
Secretary PANETTA. Senator, youve raised a legitimate concern
here, you know, with regards to the responsibility of NATO nations
to assume a greater responsibility for developing their capabilities
and improving their defense posture.
One of the things that came out of the NATO meeting in Chicago
was developing greater capabilities for NATO with regards to missile defense, intelligence, surveillance, and reconnaissance (ISR),
with regards to other areas, to try to ask them to assume greater
responsibilities in those areas.
But I also think as I stated to my fellow defense ministers, we
have great concerns because of the budget situation that faces
many of those nations in Europe that one of the dangers here is
that theyll constantly go back to defense and seek further savings
there, which I think would be dangerous.
Right now, for example, when it comes to a NATO deployment,
Libya is a good example, I think we provided probably about 60
percent of the support for the forces that went into Libya. Now
they tell me that if we were to engage, the United States would
probably have to pick up 80 percent of that responsibility.
You know, thats not something that really makes clear to those
nations the responsibility they have to be able to develop their own
capability. So I think its very important to continue to stress to
those countries that they have to continue to invest in their basic
security.
There are some countries that are doing that. There are some
countries that are investing well over 2 percent of their GDP in the
defense budgets. We commend them for that.
But other countries have to recognize that the last thing that we
need right now is for them to do further cuts in the defense budgets that they have because that will put more of a burden on our
shoulders in the future.

30
Senator HUTCHISON. Well, let me just take Germany as an example. And Germany is certainly going through the hard times, and
we understand, and theyre burdened with regard to the rest of Europe.
But on our side, representing our interests, Germany, in military
construction, Germany contributes 7 percent to the infrastructure
costs that we would make in their country, as compared, for instance, to Japan, which provides at least 40, and sometimes more,
percent.
Germany has refused to contribute any resources into Libya. In
Afghanistan, they limit what they will do, and their number of
troops has been around 5,000.
Now, the army is planning this year to spend 7 percent of its
military construction budget in Germany, thats on top of the
NATO part. It will be about $243 million this year, to build
Landstuhl, which is fine, thats a priority of ours. Im for that.
But the other half, a $113 million, is for new schools, elementary
and high schools. Now, obviously, if our troops are there, we need
to furnish the schools that are good.
But my question is, the troops that are there. Are we overspending the military construction for the amount of troops that we
have there?
And are we looking at the future on whether, in fact, it might
be the rotational forces that you mentioned, is more of the strategy
in the Pacific, that maybe we would start doing that in Germany
and other places and cut back on this enormous military construction cost?
Secretary PANETTA. Ill ask General Dempsey to comment on this
as well.
But were doing exactly that. Were bringing two brigades home
from Europe. One of the things we intend to do is to emphasize
more of the rotational presence that we have there, and to be able
to do exercises.
We do have some important infrastructure there. Its very important to our deployments to the Middle East and to the war zone,
and thats the reason some of that is continuing.
But I think youre right. I think weve got to increase our rotational deployments. Weve got to ask them to make a greater contribution to the infrastructure needs to do this.
At the same time, let me make very clear, the NATO alliance is
extremely important to our ability to deal with some of the challenges in the world. We cant do it alone.
Weve got to be able to have alliances like NATO, be able to work
with us in confronting the many challenges that we face in the
world.
General DEMPSEY. Yes, were out of time, Senator.
But what I would offer is a briefing to you on what we consider
to be the enormous and important benefits of being part of that alliance. And I know some of them are self-evident.
But weve got initiatives, Baltic Skies, allied ground system, the
activities in Kosovo, things that are kind of behind the scenes that
we really need to expose to you so that you understand the reason
were still so deeply integrated into the NATO command structure.

31
And acknowledging your point about their investment and the
fact that its declining. But lets, if I could, take that one as a task.
Senator HUTCHISON. I appreciate it, and thank you, Mr. Chairman.
I do just hope were looking at an equalization of effort according
to the return that were getting. Thank you.
Chairman INOUYE. Thank you.
Senator Mikulski.
Senator MIKULSKI. Thank you very much, Mr. Chairman. Secretary Panetta, General Dempsey, and Mr. Hale.
First of all, we want to welcome you, and we want to thank you
for your service.
Mr. Panetta, you came to the House of Representatives in 1976.
We came together. We were part of the bicentennial year. And the
way were going, were going to be here for the tricentennial.
And, General Dempsey, you graduated from West Point just
about the time Secretary Panetta and I were getting started in the
Congress.
But you two represent close to 70 years, 35 years in each military and through a variety of exemplary civilian posts. So we thank
you for your dedication and your service to the country.
And, Mr. Hale, your being here, shows what is often overlooked
when we talk about national security, the role of the civilian work
force in supporting our military, its commanders, and the Secretary
of Defense and the Commander in Chief. So we want to thank the
civilian work force.
CYBER

I want to raise some questions about new priorities and new

threats, acknowledging that Maryland has really a strong military
presence from the Naval Academy to Walter Reed, Naval Bethesda,
helping those with the wounds of war, to Fort Meade, our new
cyber command, the 10th Fleet, Pax River, Andrews, Aberdeen,
Fort Detrick, were really proud of the presence here.
But I want to go to the issues of cyber. Mr. Secretary, youve said
publicly, and even at our debriefings, that you viewed cyber as the
potential digital Pearl Harbor.
And, General Dempsey, you, and again, at meetings, briefings
and our cyber exercise, talked about the great sense of urgency.
Could you talk about what you mean when you say a digital Pearl
Harbor?
Do you feel that, as you indicate on page 6 in your testimony,
Sir, you have the right money? And do you also have the authorities that you need to do to protect the Nation?
You have here, in addition to the Appropriations chair Senator
Inouye and Ranking Member Cochran, but you have the chair of
the Intelligence Committee, you have one of the co-authors of the
Lieberman-Collins bill.
So we want to make sure that we dont have a digital Pearl Harbor. So could you elaborate on what you meant? Do you have what
you need? And should we have a greater sense of urgency in getting some things done, and what would you say theyd be?
And, General Dempsey, Id like your comments as well, Sir.
Secretary PANETTA. Senator, I appreciate the question.

32
I think there has to be a greater sense of urgency with regards
to the cyber potential, not only now, but in the future.
I think this is a, obviously, its a rapidly developing area. The reality is that we are the target of, you know, literally hundreds of
thousands of attacks every day. Its not only aimed at Government;
its aimed at the private sector.
There are a lot of capabilities that are being developed in this
area. Im very concerned that the potential in cyber to be able to
cripple our power grid, to be able to cripple our Government systems, to be able to cripple our financial systems, would virtually
paralyze this country.
And, as far as Im concerned, that represents the potential for
another Pearl Harbor, as far as the kind of attack that we could
be the target of, using cyber.
For that reason, its very important that we do everything we
can, obviously, to defend against that potential. I feel very good
about our capabilities in terms of defending our systems with the
help of the National Security Agency (NSA) and their great technological capabilities.
I do think that authorities, and the ability to try to not only, its
not only in the defense sector, its in the civilian sector, that we
have to improve this. And I think thats the area where we have
to deal with the additional authorities.
And I think the Lieberman-Collins bill is one that addresses
that, and we support the Congress enacting that in order to try to
facilitate that capability.
General DEMPSEY. I would just add, Senator, that weve seen the
world go from distributed denial of services, you know, just hackers
overwhelming a Web site, to incredible intellectual property theft
and technology theft, to now destructive cyber.
Its in the open press. And that has all happened in a matter of
a few years. And this particular domain, the cyber domain, is
changing rapidly.
And so to your question about sense of urgency, I cant overstate
my personal sense of urgency about that.
Second, Id like to pile on to the Secretary in support of the pending legislation that encourages information sharing and takes a
good necessary but only first step.
And then, third, Ill tell you on the issue of authorities. The
President does have the authorities he needs. What we need to develop are some rules of engagement, if you will, because these
things occur at network speed.
This is not something where we can afford to, you know, convene
a study after someone has knocked out the east coast power grid.
So, were working on that.
Senator MIKULSKI. So, I know my time is up, but what you say
is that you feel that theres enough money in the DOD approach
to meet the protection of the .mil.
What gives you heartburn and concern is the protection of .com.
Secretary PANETTA. Thats right.
Senator MIKULSKI. And as you develop rules of engagement, the
Congress now has to really have a sense of urgency at developing
the legislative framework, starting with Lieberman-Collins, in the
protecting of .com.

33
Does that sound right?
General DEMPSEY. If I could just, maybe just sharpen that a bit.
I dont have any intention of, you know, the .com would include
your personal email address. Im fine with you doing what you do
in your own personal email domain.
But Im concerned about the defense industrial base, and Im
concerned about the critical infrastructure of this country. Thats
where we should focus our efforts.
Senator MIKULSKI. Thank you very much.
Mr. Chairman, I know my time is up. I have other questions related to military medicine, and if I could, one final note.
COMFORT

Mr. Secretary, I wouldnt be the Senator from Maryland if I

didnt raise the ship, the Comfort. Todays the beginning of our sail,
tall ships coming into Baltimore Harbor.
As ancient ships come in, were saying goodbye to the hospital
ship, the USNS Comfort. I take no comfort in that. Could you take
a look at it and see if I could keep the Comfort, or Maryland can
keep the Comfort.
Thank you.
Chairman INOUYE. Thank you very much.
Senator Durbin.
Senator DURBIN. Thank you very much, Mr. Chairman. Mr. Secretary, General Dempsey, and Mr. Hale.
BUDGET

Mr. Chairman, you recalled your time in the House of Representatives, and at one point you chaired the House Budget Committee,
and I was one of your loyal acolytes.
You set the stage in our budget deliberations for us to reach a
balanced budget, which Im very proud of that achievement, and I
know it wasnt easy.
I asked the Appropriations Committee staff to compare spending
when our budget was in balance to where it is today, in three categories, using constant dollars, and heres what they came up with.
Going back to 2001, in domestic discretionary spending, there
has been zero increase in spending. When it comes to entitlement
spending, there has been 30-percent increase in spending since we
were in balance.
With the budget we are proposing, the base budget, not the OCO,
but the base budget were proposing for the Department of Defense,
it will be a 73-percent increase over what we were spending when
we were in balance in constant dollars.
I might also say to you though I think the sequestration clearly
hits hard, maybe too hard, and too fast, at the end of the day under
sequestration, Defense would end up with the same percentage of
the gross national product (GNP) that it had when the budget was
in balance.
So my question to you is one to take a step back, perhaps from
your role, and go back to your history with the budget. What is a
fair number for us when it comes to the defense of this country and
security?

34
I know we need every dollar it takes to be safe. But if we are
going to cut back in healthcare and education to provide more
money on the military side, isnt that going to have an impact on
the men and women who volunteer to serve in our military, and
whether they are qualified to serve?
Secretary PANETTA. Well, first and foremost, you know, with regards to the defense budget, I do believe we have to play a role.
And the fact is that were going to be cutting half of $1 trillion from
the defense budget over the next 10 years.
SEQUESTRATION

Senator DURBIN. Under sequestration.

Secretary PANETTA. And this is part of
Senator DURBIN. In addition to sequestration.
Secretary PANETTA. And then if you add sequestration to that,
youre looking at another chunk, $500 billion, on top of that.
So, I think, defense, it does have to play a role. At the same time,
I think we have a responsibility, obviously, to protect the strongest
military in the world, and to help defend this country.
On the larger issue, Senator, you know this as well as I do, and
I think every member of this subcommittee knows it, youre dealing
with a very serious deficit issue and debt issue. And you cant keep
going back to the same well to try to resolve those issues.
You cant keep going back to domestic spending. You cant keep
going back to the discretionary side of the budget in order to solve
a multitrillion dollar problem that faces this country.
I mean, if youre serious about taking this on, its what we had
to do, frankly, beginning in the Reagan administration, thats what
we did in the Bush administration, its what we did in the Clinton
administration.
If youre serious about taking this on, you got to put everything
on the table. Youve got to look at mandatory spending. Youve got
to look at revenues. You also have to look at, you know, how you
cap domestic discretionary.
But youre not going to solve this problem with the domestic discretionary budget. Youre just not.
Senator DURBIN. May I ask you this question?
DEPARTMENT OF DEFENSE CONTRACTORS

When we broughtin the Simpson-Bowles Commission, when we

brought the experts in to talk about the Department of Defense
and where we might save money, the most startling testimony
came when we asked about private contractors who work for the
Department of Defense.
The basic question we asked is, how many are there? And the
answer was, we dont know. We really dont know.
Estimate somewhere, you know, maybe Governmentwide, some 7
million. There are 2 million Federal civil service employees, to give
you some context here.
And when you look at the dollar amounts that are being spent
in the Department of Defense for contractors, as opposed to the civilian work force at the Department of Defense, and those in uniform, it is substantially higher.

35
For many of us, this outsourcing just became a passion, and people stopped asking the most basic question: Is this serving the Nation well? Is it saving us money?
I notice that you are in-sourcing more. Youre bringing some jobs
back into the Department of Defense. And in your earlier testimony, you said you need to reduce the service support contractors.
So it seems to me that there has been documented waste when
it comes to these service contracts. When it comes to the contracts
for big ticket items, I will tell you the cost overruns on the F35
equal 12 Solyndras.
I havent heard too many press conferences on those, but its an
indication to me that there is money to be saved there, and I know
that you would take that personally and want to do it.
How much is built into your cost savings and cuts when it comes
to this potential overspending on contractors and cost overruns on
projects?
Secretary PANETTA. Well, obviously, on the efficiency front, this
is an area of principal focus. We did $112, or $125 million last
year?
Mr. HALE. On service contracts.
Secretary PANETTA. On efficiencies.
Mr. HALE. $150 billion.
Secretary PANETTA. $150 billion last year with regards to those
efficiencies. Were adding another $60 billion on top of that. A lot
of that is aimed at trying to reduce the contractors, and to try to
gain greater efficiencies there.
Look, Id be the last one to say that we cant find those savings
in the Defense Department budget. We can, and thats what we
did.
But the goal is not simply to whack away at it without tying it
to a strategy about what kind of defense system do we need for the
future in order to protect the country.
As long as we can tie it to that strategy, as long as we can make
sense out of how we achieve these savings, then we can achieve,
as I said, the $500 billion in savings that weve been asked to do
by the Congress, and we can achieve and be more efficient in the
future.
But dont think that Defense alone is going to solve the bigger
problem that youre facing in this Congress and in the country.
Chairman INOUYE. Senator Harkin.
Senator HARKIN. Thank you very much, Mr. Chairman. Mr. Secretary, welcome back.
DISCRIMINATION

I have two kind of disparate issues I wanted to cover with you.

One, last November, we had a short conversation about what I
was hoping to be perhaps the next step in breaking down the discrimination against people with disabilities in our country.
And that was allowing people with disabilities to serve in our
Armed Forces. We had a unique case of a young man who had gone
through Reserve Officers Training Corp (ROTC) in California, had
done extremely well in all of his tests, all of his scores and stuff,
but was denied entry into the military because he was deaf.

36
And I reported to you at that time perhaps having a pilot program, of bringing people in to the military, who could add to the
defense of this country, who would be exemplary employees, but
they might not be able to be the Chairman of the Joint Chiefs of
Staff. They may not be a pilot in the Air Force or other things they
might not be able to do, but they can do a lot of other things.
And so, since that time, I must tell you that weve had some
problems with the Department of Defense in moving ahead on this.
You even requested, Mr. Secretary, a briefing on this from people
down below, but nothing is happening.
I can tell you that my staff has tried to work on this since the
first of this year. Numerous phone calls and meetings have been
cancelled. We could never get any response on this about setting
up such a pilot program until a couple of days ago when they found
out that I was going to ask you about this, and we now have a
meeting set up next week, which is fine, I understand all that.
Im just saying that I know that you were going to look at that.
I just think this is one place where again, weve got to break down
some of these barriers. Theres a lot of people with disabilities that
want to serve their country, can serve in the Air Force, Army,
Navy, Marines.
They may not be able to do exactly everything that people can
do, but they can do within their abilities. They can provide a lot
of support. And then I would just ask you, please, once again, to
really take a look at this and set up a pilot program.
And, if you cant do it, Mr. Secretary, if you cant do this, if something is prohibiting you from doing that, let me know, and well try
a legislative approach on it.
Secretary PANETTA. No, I appreciate your leadership on this
issue. Youve led on this issue for a long time during your career
here on the Hill, and I respect it, but, more importantly, I agree
with you.
And for that reason, you know, I think we can try to set up a
pilot program. I mean, look, right now, when we have wounded
warriors, and let me tell you, wounded warriors come out of there
with new legs, new arms, and sometimes theyre back at duty, and
theyre doing the job, and theyre doing it well.
Senator HARKIN. Exactly.
Secretary PANETTA. So if we can do it for wounded warriors, I
think we can reach out and do it for others as well that can be part
of it. So you have my assurance, well look at something.
Senator HARKIN. I appreciate it. Especially looking at some of
these young people that are coming through schools right now and
stuff who have a lot of abilities and want to serve.
That was one. The second one had to do with another issue that
I briefly raised with you. In Afghanistan, the Department of Defense has been involved in a program of spurring small businesses
in Afghanistan.
Obviously, you get people off of the drug business and stuff. And
one of that was in the carpet industry. The Afghan law, theres an
Afghan labor law. Theres U.S. law. Theres International Labor
Organization (ILO) Convention 182 about child labor, using child
labor in this thing.

37
INSPECTION SYSTEM

We asked that you work with the Department of Labor, our Department of Labor, on this to incorporate, to use a nongovernmental organization (NGO), in terms of monitoring this and setting
up an inspection system, an independent, third-party inspection
and verification system to make sure that no U.S. taxpayers dollars are used to support businesses that employ children in the
worst forms of child labor.
Now, weve had some progress in that, but as we tend now, as
were going to turn this over to them, were not setting up a mandatory verification system, and that bothers me.
So, in other words, we were kind of doing a pretty good job, but
now that were handing it over in our agreement, were not making
an agreement to make sure that they adhere to the independent
third-party verification system there.
I know its a small thing. You got a lot on your plate, Mr. Secretary. Youre talking about all of our budgets and stuff like that,
but to me, this is just again, one of those areas where we can do
a lot of good while also supporting an industry in Afghanistan.
And, again, I would ask you to look at those contracts that we
have to safeguard that verification, and that third-party
verification system in Afghanistan.
Secretary PANETTA. I know were aware of your concerns in this
area. Let me ask Bob Hale to comment on that.
Mr. HALE. Senator Harkin, I think youre referring in part at
least to some contracts through the Task Force for Visits and Stability Operations.
Senator HARKIN. Thats the name.
Mr. HALE. They did do some delays trying to make sure that
there were appropriate safeguards on child labor. Its a difficult
area to work in, a country that has different rules and standards
than we do.
Senator HARKIN. No, theres an Afghan law.
Mr. HALE. Say again?
Senator HARKIN. Theres a law in Afghanistan. We just want
them to adhere to their own law, thats all.
Mr. HALE. Okay. I hear you. They are aware of the concerns, and
I think they have made some steps in the right direction, but I
promise you, Ill go back and make sure that were doing all we
can.
Senator HARKIN. Thank you. If you could just give me a point
person to work with in your office down there, because my staff
and I know this pretty well, and we know what needs to be done
in terms of that verification. Thats the big sticking point.
Mr. HALE. Okay. Well do that.
Senator HARKIN. Thank you. Thank you, Mr. Chairman.
Chairman INOUYE. Thank you very much.
Senator Collins.
Senator COLLINS. Thank you, Mr. Chairman.
First, let me thank my colleague from Maryland for bringing up
the very important issue of cyber security. She along with Senator
Feinstein, Senator Lieberman, Senator Rockefeller, and I have
been working very hard and agree that its absolutely critical that

38
we set standards for critical infrastructure, and that that has such
important consequences.
And I very much appreciate the endorsement of our efforts that
I heard this morning. I also appreciate, Mr. Secretary, your urging
as to act sooner rather than later to avert what would be the disastrous consequences if sequestration were allowed to go into effect.
I think it would be a huge mistake for us to wait until the lame
duck, thats too late, and we do need to tackle that issue now. We
really do.
And I think it would help if you provide us with even more detail, and I know the Armed Services Committee has asked for that.
SHIPBUILDING

Let me turn to another issue that refers to our priorities. As I

review the Department of Defenses budget, Im very concerned
that the ship building account is significantly undervalued.
Shipbuilding represents a mere 2.2 percent of the budget requested by the Department of Defense. Sixteen ships were eliminated or delayed outside the 5-year budget window.
And just to put this in perspective, our country currently spends
as much on interest payments on the national debt every month
than we do for shipbuilding in the entire year.
Further, the executive branch as a whole spends slightly more
than the equivalent of the entire shipbuilding budget, $15 billion
a year, on Federal agency travel and conferences.
Now, I know the administrations trying to address travel and
conferences, but that really says something about our priorities.
Im concerned that the combatant commanders have testified repeatedly about the increasing importance of the maritime domain
and their areas of responsibility.
I recently returned from a conference in Southeast Asia, and I
know Secretary Panetta, you were over there as well, in which I
heard about Chinas aggressiveness in the South China Sea, and
its maritime claims, its harassment of vessels from the Philippines,
for example.
The importance of our Navy and to our ability to project power,
particularly with the pivot to the Asia Pacific region, cannot be
overstated.
So Im concerned that the budget projects only 285 ships by fiscal
year 2017 when every study Ive seen, whether its within the Department or outside of the Department, independent reviews, have
said that we need a minimum of between 300 and 315 ships.
And the fact is that while our ships are increasing in their ability, that quantity still counts, if youre going to try to project power.
So I would ask you to address my concern and how the Department settled on 285 ships when virtually every study calls for 300
to 313.
Secretary PANETTA. Senator, I appreciate the concerns that
youve indicated.
And what I asked the Navy to do, and the Navy Chief to do, is
to make very certain that we have the ships we need in order to
project the power we have to project in the Pacific, in the Middle
East and elsewhere, and be able to do that effectively.

39
And their recommendation was that based on, you know, the
number of ships that are in line to come on, the ones that we are
already producing, that to do this and do this in a way that meets
our needs, that the 285 ship approach is a good baseline, and were
ultimately going to move to 300 ships by 2020.
You know, were maintaining 11 carriers. Were going to maintain, you know, a number of the amphibs. Were going to maintain
our destroyer and our key fleets. With regards to the Pacific, were
obviously going to maintain a strong submarine force as well.
And Im convinced based on the Navy Chiefs recommendations,
that we can do this, you know, obviously meeting our fiscal needs
here, but we can do this in a way that protects a strong Navy for
the future.
Now, Im willing to keep going back and looking at those numbers to make sure that were in the right place, because I share the
same concern. If were going to have a strong presence in the Pacific, if Im going to have a strong presence in the Middle East, I
have got to have a Navy thats able to project that.
And right now, I think everybody Ive talked to in our shop and
in the Joint Chiefs says, weve got the force we need to be able to
make that happen.
General DEMPSEY. Senator, I know were over time, but I really
feel obligated to comment on this, because I mentioned in my opening statement that the budget we submitted is a joint budget.
Its not the individual service budgets kind of bundled together.
We really worked this as a joint team.
We were faced with the Budget Control Act, $487 billion. And so
every service paid a bit of that bill. I will tell you the Navy paid
least of all because we prioritized exactly the issue youre talking
about.
But, you know, quantity counts, not only at sea, it counts in the
air, and it counts on the land.
Senator COLLINS. Thank you, Mr. Chairman.
Chairman INOUYE. Thank you.
Senator Feinstein.
Senator FEINSTEIN. Thank you very much.
Welcome, Mr. Secretary. Its good to see you. Ive known you for
a very long time. I was sitting here thinking. Your first appearance
before the Intelligence Committee when you became Director of the
Central Intelligence Agency (CIA), you were somewhat tentative,
somewhat reserved.
And today, I saw you at full volume. Totally in control. So, its
been quite an evolution.
Let me begin by thanking you for the help you gave us on our
intelligence congressional delegation (CODEL) to Afghanistan. Its
very much appreciated.
GROUND LINE OF COMMUNICATION

I wanted to see what I might be able to talk with you a little

bit about on the ground line of communication (GLOC) subject. You
were good enough to facilitate a meeting with General Allen, and
the four of us had an opportunity to spend some time.
He was most impressive. And I think we learned a great deal.
And one of the things that came up was the incident in November.

40
And it became rather clear to me that there were mistakes made
on both sides.
And General Allen, much to his credit, has taken at least I think
its six or seven steps to remedy some of the problems. Here enter
the GLOCs.
You raised the question of the GLOCs. It is my information that
Pakistan wants most of all some civilian announcement that mistakes were made on our side. And I think mistakes were made on
their side as well as Ive looked into this.
And that the GLOC problem could be solved. As a matter of fact,
I think there was a meeting on the 11th, a day or so ago, unless
it was cancelled. And so, they are prepared to rather dramatically
lower the cost.
But the apology is all important. As we have discussed, and I
think the position is, that the national security of this Nation is
best served if we can develop a positive relationship with Pakistan.
And both you and I and others know what the road has been.
And that there might be an opportunity to make a change in that
direction, particularly with the new head of the Inter-Services Intelligence (ISI), as well as some other things.
So my question of you, and I guess my lack of understanding, is
why there cant be some form of statement that in essence says, if
its believed, I happen to believe it, that mistakes were made on
both sides.
And, of course, the United States apologizes for any mistakes
that we made, and we have taken steps to correct that and see that
it will never happen again.
Secretary PANETTA. Senator, I appreciate your concern, and you
understand these issues by virtue of your chairmanship of the Intelligence Committee and the dealings that weve had to have with
Pakistan.
Youre right. I mean, its a complicated relationship, but its also
a necessary relationship by virtue of our security needs in that
area.
This is an issue that is still under negotiation. There are discussions that continue with regards to how we can resolve this. The
issue you discussed is one of those areas. I think General Allen, the
United States, has made clear that mistakes were made and they
were made on our side. They were also made on the Pakistani side.
And that we expressed condolences for the mistakes that were
made. Weve made that clear, and we certainly have continued to
make clear the mistakes that were made.
I think the problem is that, at this point, theyre asking not only
for that, but there are other elements of the negotiation that are
also involved, that have to be resolved.
So that alone, isnt the only issue thats being discussed and that
needs to be resolved in order to get the GLOCs opened.
Senator FEINSTEIN. All right. Thank you for that answer.
Do you believe that the Afghan military will be fully ready to
take over come 2014?
AFGHAN ARMY

Secretary PANETTA. I was just there in Afghanistan on this last

trip and had a chance to meet with Minister Wardak.

41
Every time I go there, I get the opportunity to see the Afghan
army and the improvements in terms of their operations. Theres
no question, right now, theyre at about 346,000. Theyre going to
go to 352,000. Theyre way ahead in terms of achieving the target
that they want to achieve.
They are doing an incredible job in terms of maintaining security, particularly in the transition areas that weve provided. I
think that they are improving.
Our goal over these next 2 years is to continue to train, continue
to assist them in their capabilities. And I have to tell you that I
am confident that were going to be able to complete all of the transition in the areas that we have as part of General Allens plan.
That we can do this because we have the Afghan army in place,
but also because we continue to have ISIF in places well to provide
the support necessary. So I think the combination of an Afghan
army thats able to do the job plus the kind of enduring presence
that we need to have there as well in order to assure that the
training and assistance continues.
I think that combination does make clear that theyre going to
be able to govern and secure themselves at that point.
Senator FEINSTEIN. Thank you very much. I know that my time
is up.
Chairman INOUYE. Thank you very much.
Senator Coats.
Senator COATS. Thank you, Mr. Chairman.
Just two things I would like to raise in the time that I have.
One is, Mr. Secretary, as CIA Director, you had operational control over the bin Laden raid. As you know, three of us on this Committee also serve on the Senate Intelligence Committee which Senator Feinstein chairs.
And weve been alarmed, I think its fair to say, with this recent
spate of leaks that have occurred. We are working together in a bipartisan way to try to address this.
But one of the areas of concern is over the question of this accommodation with Hollywood filmmakers regarding the bin Laden
raid. Its been alleged that the name of one of the participants in
that, one of our uniformed participants in that, has been made public.
We are wondering, the question is whether other details have
been shared about that. This comes on the heels of a series of devastating leaks that have compromised very sensitive operations,
put peoples lives at risk.
Devastating negative consequences going forward in working
with sources, et cetera, et cetera. Youre well aware of all that.
I guess my question here is simply the role of the Department
of Defense relative to this Hollywood situation and other situations
where your forces are involved.
And I think its just fair to say, the Chairman would agree, that
were looking at every possible avenue to try to minimize, mitigate,
eliminate these types of leaks.
And so working with you and your people in your Department I
think is going to be helpful as one of the areas that were going to
need to work with in a comprehensive way of trying to get a handle
on this.

42
Im really not asking you for details regarding all this. We all
love to go see these Hollywood movies. Theyre exciting and so
forth.
CLASSIFIED OPERATIONS

But to the extent that information is shared relative to classified

operations and personnel to make the movie a little more exciting
and realistic and so forth and so on, contributes to the problems
that we have.
And so I think we want to make sure that each department,
whether its the agency or whether its the intelligence community
or whether its the Department of Defense is aware of the fact that
we need to thoroughly investigate all this and put in place measures which will prevent this from happening in the future.
Whether you want to comment on that or not, Ill leave that to
you.
Secretary PANETTA. Thank you. Thank you, Senator.
Look, let me first say as a former Director of the CIA, I deplore
the unauthorized disclosures of classified information.
Senator COATS. I know you do.
Secretary PANETTA. I think that this is something that does have
to be fully investigated, and it has to be very clear that this is intolerable if were going to try to protect the defense of this country.
Weve got to be able to protect those who are involved in clandestine operations.
Having said that, I also want to make clear that, you know, no
unauthorized disclosures were provided to movie producers or anybody else. What we do have is we do have an office at the Pentagon
that almost every day deals with people that want to do something
about, you know, either a movie or a book or an article or something related to our defense.
And we want to make sure that the information that they do use
is accurate. And we do assist them with regards to the accuracy of
that information. But I can assure you, Ive asked that question,
in this instance, nobody released any information that was unauthorized.
Senator COATS. Well, I hope you would join us in a thorough review of procedures just to make sure that our policies are straight
on this.
Secretary PANETTA. We will. Absolutely.
Senator COATS. Thank you.
And, General Dempsey, you and I were posted to Europe during
the same timeframe, and I do agree with Senator Hutchison that,
you know, with this rebalancing and global posture and with our
financial fiscal issues, we have to be very careful with taxpayers
money.
And I think she raised some legitimate questions in terms of infrastructure and MILCON money going to that. By the same token,
Id just like to get your take and make sure that were not rebalancing too far.
I mean, as you look across this arc of terrorism and arc of threats
starting in Pakistan and Afghanistan and coming across to Iran
and Israel and Syria, the Arab Spring, all those countries involved

43
and so forth, everything from the Khani network to Al-Shabaab in
Somalia.
I mean, there are a lot of threats out there. And the question is,
some of these threats require a rapid response.
And Germany has always been a place where we have facilities
to house and train those people who can be that rapid response to
emergency situations and as well as just normal operations.
Have we gone too far? Or, I mean, are we on the cusp of leaving
too much too fast?
And then when you also add the NATO component in terms of
our need to continue to utilize and keep that organization dynamic
and vibrant and effective as a partner. What is your take on all
that?
General DEMPSEY. Well, as you know, Senator, former Ambassador, Ive had 12 years of service in NATO, and so I tend to see
the world in many cases through our North Atlantic Alliance.
And, in fact, I think thats legitimate because it is the track
record of this country that when we enter into conflict, the first
people we turn to to be partners with us in that regard are the
members of the North Atlantic Alliance.
Second, you know, we shouldnt discount the benefit of being
there to also build partners, build their capacity. And we do that
at places like Hohenfels and Grafenwoehr and elsewhere.
And I think that building their capability makes it certain that
we wont always have to be in the lead, even if sometimes there
is some political reluctance that has to be overcome to do that.
I mention the Allied Ground Surveillance System which is a
SMART defense initiative. I didnt mention the European phase,
adaptive approach, ballistic missile defense cooperation. Weve just
gone through a NATO command structure review and shrunk the
number of headquarters from about 12 to about 6.
So, I mean, I will just tell you that I tend to be very strong on
our relationship with NATO, notwithstanding the Senators concerns about the investment.
Senator COATS. Thank you, Mr. Chairman.
Chairman INOUYE. Thank you very much.
Senator Graham.
Senator GRAHAM. Thank you, Mr. Chairman.
Thank you both for your service. I think we have a vote on so
Ill try to cover as much ground as possible.
SEQUESTRATION

Mr. Secretary, if we do not change the sequestration dilemma, if

we dont do something about it before the election as a Congress,
when can we expect layoff notices to hit?
Secretary PANETTA. Well, obviously, industries make that decision, but under the law, I think theyve got, they got to do it at 60
days.
General DEMPSEY. The Worker Adjustment and Retraining Notification (WARN) Act, anywhere from 60 to 90 days.
Secretary PANETTA. Yes, 60 to 90 days before it takes effect.
General DEMPSEY. So, September.
Senator GRAHAM. Will you have to lay off any civilian employees
as a result of the sequestration?

44
Secretary PANETTA. I suspect that if in fact it ultimately takes
effect, were going to have to do the same thing, sure.
Senator GRAHAM. Well, would you do the same thing, 60 to 90
days before? I would urge you to do it sooner rather than later.
Secretary PANETTA. We have to. We have to.
Senator GRAHAM. Well, I just want you to make it real to us.
It seems like the biggest bipartisan accomplishment weve had in
recent memory is to destroy the Defense Department. Its not something Im very proud of, and its going to take bipartisanship to
undo this.
So the sooner you can tell us about the number of jobs to be lost
and how it will affect our Defense base, I think the better for the
Congress as a whole.
Now, youre telling us about TRICARE. Youre telling us you
have a budget problem. When is the last time TRICARE premiums
have been adjusted for the retired force?
General DEMPSEY. 1993.
Secretary PANETTA. 1993.
Senator GRAHAM. Okay.
Now, members of this subcommittee and I know we all love our
retired military members, and I hope to be one one day, but isnt
it unsustainable for you, if we do not bring this program into some
kind of a sustainable footprint, youre having to compete with retiree healthcare against modernization, against benefits for todays
force, against the ability to fight and win wars; is that correct?
Secretary PANETTA. I mean, as I said, were paying $50 billion
now in the healthcare arena, and if we dont control those costs, its
going to eat up other areas that are vital for our defense.
Senator GRAHAM. So, youre telling the Congress, its
unsustainable.
Secretary PANETTA. Exactly.
Senator GRAHAM. Youre having to make choices between the retired healthcare costs and fighting this war and future wars.
Secretary PANETTA. Thats correct.
Senator GRAHAM. And I hope we can find a way to be fair to the
retired force, but also to maintain a sustainable military budget.
When it comes to retirement, youre talking about reshaping retirement benefits in the future not for people who exist today,
right?
Secretary PANETTA. Thats correct.
Senator GRAHAM. Because if you retire at 38, you get half pay
for the rest of your life. Maybe thats something we need to revisit.
I want to be generous, but I want it to be sustainable.
Thats the message to the Congress, right?
Secretary PANETTA. Thats correct.
Senator GRAHAM. Okay. And your message about sequestration
is, Im doing my best to handle $450 to $500 billion. If you want
to double that, youre going to destroy the best military weve ever
had.
Is that simply put?
Secretary PANETTA. Thats right.
Senator GRAHAM. Okay.

45
GROSS DOMESTIC PRODUCT

Now, GDP spending on the military. Whats been the historical

average for the last 45 years of GDP spent on the military?
General DEMPSEY. Back to the last 20 years, maybe 4 or 5 percent.
Senator GRAHAM. Okay. Its 5.5 percent over the last 45 years.
General DEMPSEY. You knew the answer.
Senator GRAHAM. September 11, 2001, it was 3 percent. Today,
it ranges from 4 percent to 5.78 percent. In World War II, it was
5.72 to 42 percent. The Korean War was 8.25 to 18 percent. Vietnam, 7.65 to 10.86.
I would argue to my friends on both sides of the aisle, that youre
right. Were not going to get out of the debt by lowering the military spending alone.
Im all in for reforming the way we spend money. Costs plus contracts seem to be a bad idea. Do you agree?
Secretary PANETTA. Thats correct.
Senator GRAHAM. The longer it takes, the more you make. The
more it costs, the longer it takes for the contractor, the more they
make.
Youre looking at doing a fixed-price contract for future weapons
acquisitions, right?
Secretary PANETTA. Thats right.
Senator GRAHAM. Where everybodys got skin in the game. Go
down that road. I applaud you tremendously for doing that.
Aid to Pakistan. Do you consider the Foreign Ops budget a benefit to the military? The Foreign Operations account, the State Departments role in the world.
Secretary PANETTA. Yes.
Senator GRAHAM. Okay. Would you recommend to us to stop aid
to Pakistan right now?
Secretary PANETTA. Id be very careful about, you know, just
shutting it down.
What I would do is look at conditions for what we expect them
to do.
Senator GRAHAM. What about Egypt?
Secretary PANETTA. No, I would not, I think, at this point in
time, support that
Senator GRAHAM. Could you and General Dempsey write me a
letter recommending to the Congress what we should do about our
aid programs to the Pakistani military, the Pakistani Government,
to the Egyptian military and to the Egyptian Government?
Secretary PANETTA. Yes.
Senator GRAHAM. Okay.
The last thing I want to talk to you about very briefly is you said
something that just kind of went over everybodys head I think.
That theres a Pearl Harbor in the making here.
Youre talking about shutting down financial systems, releasing
chemicals from chemical plants, releasing water from dams, shutting down power systems that could affect the very survival of the
Nation.
Whats the likelihood in the next 5 years that one of these major
events will occur?

46
Secretary PANETTA. Well, you know, all I can tell you is that
Senator GRAHAM. Is it a high probability or low probability?
Secretary PANETTA. All I can tell you is that, technologically, the
capability to paralyze this country is there now.
Senator GRAHAM. Is there a growing will to use that capability
by our enemies?
Secretary PANETTA. I think the more this technology develops,
the more the will to potentially use it is going to dictate the will.
Senator GRAHAM. Would you say there is a high probability, that
the capability, and the will?
Secretary PANETTA. I think theres a high risk.
Senator GRAHAM. Okay. Thank you both for your service.
Chairman INOUYE. Thank you.
Senator Murkowski.
Senator MURKOWSKI. Thank you, Mr. Chairman. I will be brief.
Gentlemen, thank you.
AIR FORCE IN ALASKA

Secretary Panetta, you have mentioned that this budget needs to

relate to the full-defense strategy. We certainly understand that
with the attention to Asia and the Pacific. We think that Alaska
plays a large and a significant role. We have, historically.
But we think going into the future, that that role actually accelerates. There has been a proposal by the Air Force to move the F
16 Aggressor Squadron from Eielson. Weve raised many, many
questions.
Unfortunately, it seems that there are more questions that are
being raised after we receive some of the information from the Air
Force.
We just got the site activation task force review that was assigned to look at the feasibility of this move. The concern that we
have is in addition to additional questions being raised, youve got
a situation where the other forces are, I think, are impacted.
Youve mentioned that this needs tothis budget needs to be a
balance between all forces. Were looking at the impact to the
Guard which has the 168th Refueling Wing, and how it will be impacted if Eielson is put to reduced hours.
We look at the incredible Army training ranges that we have up
north that could be comprised. At J-Bear, weve got some very serious housing issues that need to be assessed.
We are in a situation now where we are trying aggressively to
get some very concrete answers from the Air Force on this. We
have determined that this proposal is going to cost us this next
year $5.65 million in fiscal year 2013, which does not fall in line
with the Presidents budget.
The very direct question that I have to you, Secretary Panetta,
General Dempsey, is whether or not you will encourage the Air
Force to abandon this plan for Eielson Air Force Base in 2013.
Take this proposal back to the drawing board, give it the thorough, very comprehensive vetting that it must have, to ensure that
in fact we are operating with the focus, the vision towards the Asia
Pacific, and that this truly does reflect the new defense strategy.
Secretary PANETTA. I will have General Dempsey respond to this
as well.

47
Let me make clear that, you know, the Air Force was looking for,
obviously, ways to save money because of the responsibility to respond to the Budget Control Act.
There are F15s located at Eielson. Theres F15s located at Elmendorf, and they felt that it was better to try to unify those.
I just want you to know, and Ive shared this with your colleague
as well, that we have no intention of closing down Eielson. Its a
very important base for us. Its important in terms of air refueling.
Its important in terms of the role that we want to be able to play
with regards to the Pacific.
And so nothing that is being recommended here in any way is
intended to impact on Eielson itself as a future base for the Air
Force.
General DEMPSEY. Ill just add.
I know that you and Senator Begich are in contact with the Air
Force. I wont commit to going back and talking the nut of their
plan. I will commit to you to go back and make sure I understand
their plan better. And then, Ill engage with you on it personally,
you and Senator Begich.
Senator MURKOWSKI. Well, I appreciate that.
I do recognize though that part of the proposed savings that the
Air Force is looking to is demolishing several buildings within
Eielson. The replacement value of these is about $150 million.
So it puts it in a situation where it would appear to be a backdoor BRAC, and that is the concern, the consideration.
So again, if I can ask you to do a very comprehensive review,
work with us, General Dempsey, I will look forward to your conversation.
Mr. Chairman, I thank you. And I will conclude my comments
with just a direct appeal. The focus, as we look at the infrastructure is all very keen, but it always comes down to our human assets.
SUICIDE

I remain very, very troubled with the high level of suicide that
we are seeing with our military, also with our veteran population.
I think most are staggered to learn that were actually seeing more
deaths due to suicide than we are actually out in theater in Afghanistan.
How we deal with this reflects on how we are as a Nation and
our commitment to those who serve us. So I know you are focused
on that, but I felt compelled to raise it here.
Secretary PANETTA. Senator, I thank you for pointing that out.
Im very concerned by the high rate of suicides. Talking with the
Service Chiefs, they share that concern. And, as a matter of fact,
highlighted the fact that they were seeing, you know, a higher rate
in suicide than they had seen in the past.
And what Ive asked all of them to do, plus the undersecretaries
that are responsible for this, is to immediately look at that situation and determine whats behind it, whats causing it, and what
can we do to make sure it doesnt happen.
Chairman INOUYE. Thank you very much.
Senator Murray.

48
But before you do, well be leaving because theres a vote pending.
Senator MURRAY [Presiding]. Okay. Thank you very much, Mr.
Chairman. I appreciate that.
Mr. Secretary, I want to continue the thought process of Senator
Murkowski. I, too, am very alarmed by the suicide rate among our
servicemembers and our veterans.
New analysis is showing us that every day in 2012 one of our
servicemembers committed suicide, and as you just commented,
outpacing combat deaths. In our veteran population, we know a
veteran commits suicide every 80 minutes, every 80 minutes.
Now, I think we can all agree on two things. First of all, our
servicemembers and their families have risen to the challenge.
They have done everything this countrys asked of them throughout
the wars in Iraq and Afghanistan. Were all eternally grateful.
Second, the Pentagon and the Department of Veterans Affairs
(VA) are losing the battle on mental and behavioral health, conditions that are confronting a lot of our servicemembers, loved ones
and as we just talked about, resulting in such extreme things as
suicides.
Secretary Panetta, our servicemembers and veterans cant get
needed treatment or access to needed resources without correct diagnosis. As you know, this has been a major problem for soldiers
in my home State of Washington.
POST-TRAUMATIC STRESS DISORDER

At Madigan, to date, more than 100 soldiers and counting, have

had their correct post-traumatic stress disorder (PTSD) diagnoses
now restored after being told they were exaggerating their symptoms, lying, and accused of shirking their duties.
So, understandably, a lot of our servicemembers trust and confidence in the disability evaluation system has been seriously shaken in the wake of these events.
As you know, I have continually raised concerns about the consistency and accuracy of behavioral health evaluations and diagnosis within the entire disability evaluation system and have offered my recommendations on how to improve the system.
And, as you also know, the Army has now taken some critically
important steps forward in beginning to address these concerns.
Secretary McHugh has announced a sweeping, comprehensive
Army-wide review of behavioral health evaluations and diagnosis
back to 2001 to correct the errors of the past and to make sure our
servicemembers get the care and services that they need and that
they deserve.
But I wanted to ask you today, because this is not just an Army
disability evaluation system; this is a joint Department of Defense
and VA program, covers all the services. So I wanted to ask you
why the Department has not taken the lead in evaluating and
making improvements to the entire system.
Secretary PANETTA. Senator, we are.
What Ive asked is the other service chiefs view, implement the
same approach that the Armys taking here.
Senator MURRAY. To go back to 2001 and review all cases?
Secretary PANETTA. Thats correct.

49
Senator MURRAY. Throughout the entire system?
Secretary PANETTA. Thats correct.
Senator MURRAY. Okay.
So they are all following the Armys lead now, and we will be told
the evaluations and the progress of that.
Whos heading that up?
Secretary PANETTA. Our Under Secretary for Personnel and
Healthcare. Thats the individual that you need to contact.
Senator MURRAY. Well, I would very much like to be kept informed as Im sure all of our Members of Congress would. I think
this needs to be transparent and clear.
We need to make sure that people are accessing the system, getting back if they need it, and the only way to do that is to be clear,
open, and honest with everyone.
So I didnt know that we were looking at all the other Services,
and Id like more information and to be informed on that as soon
as possible about how thats taking place and what the timetable
is, and how thats going to occur.
Secretary PANETTA. I appreciate your leadership on this, Senator,
and Im not satisfied either.
I think, you know, the misdiagnosis that took place, whats happening in this area between, look, were doing everything we can
to try to build a better system between the Pentagon, the Department of Defense, and VA.
But there are still huge gaps in terms of the differences as to
how they approach these cases, how they diagnose these cases, and
how they deal with them. And, frankly, thats a whole area that
weve just got to do much better on.
Senator MURRAY. Well, you cant imagine what its like to talk
to a soldier who was told he had PTSD. His family was working
with him, and then when he went through the disability evaluation
system was told he was a liar, or a malingerer. He was taken out
of it, and then he went out into the civilian world, not being treated.
DISABILITY EVALUATION SYSTEM

That is a horrendous offense. You know, Im chair of the Veterans Affairs Committee, and I recently held a hearing on the joint
disability evaluation system. And I just have to tell you, I am really troubled by what Im hearing.
Enrollment is continuing to climb. The number of
servicemembers cases meeting timeliness goals is unacceptably
low. The amount of time it takes to provide benefits to a
servicemember who is transitioning through the system has risen
each year since we began this.
In response to these problems, we heard from DOD and VA together about how 5 years after, 5 years after the Walter Reed scandal, and this program was piloted, theyre just now beginning to
map out business processes to find room for improvement.
You know, thats just unacceptable. The public, all of us, really
believe that this was being taken head on, that we were dealing
with it. At 5 years out, unacceptable numbers that were seeing.
So I wanted to ask you what you are doing at your level to deal
with this, 5 years into this program, and were still hearing state-

50
ments from Army leaders about how the disability evaluation system is fundamentally flawed, adversarial, disjointed.
Tell me what were going to do.
Secretary PANETTA. Let me do this.
Secretary Shinseki and I have been meeting on a regular basis
to try to do what we can to implement improvements. And, very
frankly, were not satisfied either by the progress thats being made
here.
Part of it is bureaucratic, part of it is systems, part of it is just
the complicated and
Senator MURRAY. You cant image what it sounds like to hear
that.
Secretary PANETTA. Pardon me?
Senator MURRAY. Its bureaucratic. I mean, if youre in this system, thats not the word you want to hear.
Secretary PANETTA. Yes, okay.
And, you know, I see it every day. Im in charge of a very big
bureaucracy. And the fact is that sometimes just the bureaucratic
nature of large departments prevents it from being agile enough to
respond and do what needs to be done.
And so a large part of this is just making sure that people are
willing to operate out of the box, and do what needs to be done in
order to improve these systems.
What I would offer to you is let Secretary Shinseki and I sit
down with you and walk through the steps were taking to try to
see if we can try to shake the system and make it do a better job.
Senator MURRAY. Mr. Secretary, I really appreciate that commitment.
I know you have not been there the entire 5 years, but I will tell
you this, weve been told for 5 years that DOD and VA are sitting
down on a regular basis addressing this.
Secretary PANETTA. I know. Yes.
Senator MURRAY. And Im talking to soldiers that are stuck in
this disability evaluation system. There are bureaucratic delays.
The people that are supposed to be helping them, theyre training
them because theyve been in the system longer than the trainers
who are supposed to come in and work with them.
Their families are facing, you know, horrendous challenges as
they try and figure out what the future brings, months on end. You
know, people at the top are saying this is fundamentally flawed.
You ought to hear what the people at the bottom who are in it are
saying.
Secretary PANETTA. Yes.
Senator MURRAY. So I totally appreciate your saying that to me
today, but sitting down and talking with Secretary Shinseki is
something weve been hearing for a long time. We need some recommendations. We need to move forward. We need this to be a top
priority at the Pentagon.
As we transition now out of Afghanistan, this is not going to get
more simple.
Secretary PANETTA. I agree with you. No, youre absolutely right.

51
POST-TRAUMATIC STRESS DISORDER AND BEHAVIORAL HEALTH CASES

Senator MURRAY. Add to that, the complexities of now going back

and reviewing all of these PTSD and behavioral health cases, you
have people who are in the IDs system right now who are saying,
whats going to happen to me while you go back and review all
these people?
Are we putting more personnel in to deal with this? Or, now am
I going to take another back seat as we deal with that? This is
complex. Its hard. Its problematic, but it needs every single effort
from top to bottom.
Secretary PANETTA. Listen, I share all of your frustrations, and
my job is to make sure that we dont come here with more excuses,
but we come here with action. I understand.
Senator MURRAY. And I truly appreciate that comment, and I
want to work with you. All my efforts are at your disposal. We do
a fantastic job of training our men and women to go into the service. We still today have not gotten this right after this war in making sure that they transition back home.
We have families and soldiers and airmen throughout the Service
who are really stuck in a process that they shouldnt be stuck in.
Weve got to get this right, and we got to get it right now, and we
need every effort at it.
And I will sit down with you the minute you tell me you are
available, but I want more than a meeting.
Secretary PANETTA. Okay. I agree.
ADDITIONAL COMMITTEE QUESTIONS

MURRAY.

Okay. All right. I believe, is Senator Shelby on

Senator
his way?
I understand that Senator Shelby is on his way. We have a second vote. I have to get back for that. If I would just ask you gentlemen patience for him to return so that I can return for the second
vote, I would appreciate it.
[The following questions were not asked at the hearing, but were
submitted to the Department for response subsequent to the hearing:]
QUESTIONS SUBMITTED

TO

QUESTIONS SUBMITTED

SECRETARY LEON E. PANETTA

BY

SENATOR TOM HARKIN

Question. Mr. Secretary, the Department of Defense (DOD) has become increasingly concerned over the past few years regarding our militarys dependence on petroleum-based fuels. These concerns relate to both the ready availability of fuels
during times of conflict and to the increasing costs of such fuels.
For example, its been reported that the Pentagon spent $17.3 billion on petroleum in 2011, a 26-percent increase from the previous year with practically no
change in the volume purchased.
It has also been reported that for every $0.25 increase in the price of jet fuel, the
DOD must come up with an extra $1 billion annually.
Relative to future supplies and prices, we can all see that global fuel demands
will continue to increase steadily as the economies of the BRIC nationsBrazil,
Russia, India, and Chinaand similar nations grow and demand more fuel for
transportation and industrialization.
Obviously, some of our leaders in the Pentagon see these future threats as well,
and I commend the Department of the Navy for signing a memorandum of understanding (MOU) with the Department of Energy (DOE) and with United States Department of Agriculture (USDA) for the development of commercial biofuels produc-

52
tion capabilities. I understand that under this MOU, the DOD intends to fund multiple drop-in biofuel production facilities under the Defense Production Act.
Could you please speak to DODs long-term strategy for assuring future fuels supplies and the role that you believe domestic biofuels can and should play in that?
More specifically, could you comment on the role that this joint Navy/DOE/USDA
procurement activity plays in DODs longer term fuels security strategy?
Answer. In DODs Operational Energy Strategy, our goal is to ensure our forces
have the energy they need to protect the Nation. The Strategy rests on three principles:
reducing demand;
diversifying supply; and
building the future force.
Reducing demand, or getting more military output for our energy input, is the top
energy security priority for the Department. Ninety percent of the Departments investment in operational energy improvements in fiscal year 2013 will go toward
these sorts of energy efficiency and performance gains. Improved energy efficiency
not only benefits the Departments bottom line, but more importantly, helps produce
forces that are lighter, more mobile or flexible, and have greater range or endurance. Building an energy-efficient future force means that the Department needs to
integrate operational energy considerations into the full range of planning and force
development activities.
The second principle of diversifying supply is where domestic biofuels and other
similar efforts are important. The Department needs to diversify its energy sources
in order to have a more reliable and assured supply of energy for military operations. We are going to have ships, planes, and vehicles designed to use liquid fuels
for decades to come so we have an interest in the ability of drop-in biofuels to, over
the long term, provide the Department with new, sustainable, and reliable sources
of the fuel we need to accomplish the defense mission. We are looking for fuels that
are compatible with existing equipment and storage infrastructure, exploring where
and how biofuels will be available and affordable to our forces, and leveraging the
expertise of other Federal agencies where appropriate.
The Army, Navy, Air Force, and Marines have been certifying aircraft, ships, tactical vehicles, and support equipment to use alternative liquid fuels. Such activities
represent a relatively small but important investment in drop-in alternative fuels
less than 0.6 percent of the more than $15 billion the Department spent on petroleum fuel last year. This investment ensures that our equipment can operate on a
wide range of alternative fuels, which is important to ensuring our military readiness over the long term.
To aid the Military Services in this effort, on July 5, 2012, the Department of Defense Alternative Fuels Policy for Operational Platforms was released. The policy,
which was required by the National Defense Authorization Act (NDAA) for fiscal
year 2012, states that the Departments primary alternative fuels goal is to ensure
operational military readiness, improve battlespace effectiveness, and further flexibility of military operations through the ability to use multiple, reliable fuel sources.
It makes clear that all DOD investments in this area will be subject to a rigorous,
merit-based evaluation. The policy also lays out clear guidance for our future fuel
certification efforts, field demonstrations, and ongoing purchases. Of note, the policy
formalizes what is already the practice for all the Services: That DOD will not make
bulk purchases of alternative drop-in replacement fuels, outside of certification and
demonstration activities, unless they are cost competitive with petroleum products.
With this policy, the Department will continue to steward its alternative fuels investments wisely as we ensure the long-term readiness and capability of our joint
force.
Another important component of the Departments longer term fuels security
strategy is the Defense Production Act Advanced Drop-In Biofuels Production
Project, which is focused on creating public-private partnerships to incentivize private-sector investment in cost-competitive biofuel production capability. The U.S.
Navy and the Departments of Agriculture and Energy developed the initial strategy
for this project, which is now under the oversight and technical review of an interagency team that will ensure the best value for the taxpayer and the Department.
Question. As DOD has worked to strengthen the Afghan carpet industry, for the
past 2 years, I have been raising with the Department the need to ensure that DOD
funds do not, either directly or indirectly, support child labor in the carpet industry.
Ive not been wholly satisfied with DODs efforts in this regard. The contract into
which DOD entered to prevent the use of child labor in the carpet industry stopped
short of mandating an independent third-party monitoring and certification system.
Subsequent to that, the contractor offered a no-cost extension of the contract to do
just that, but DOD refused.

53
Quite frankly, I think the Department needs direction from the top that it should
examine all of its efforts in the Afghan rug industry to make sure that its doing
all that it can to ensure U.S. taxpayer dollars are not being used to exploit children
in any sector of the economy. Mr. Secretary, we have a legal and moral obligation
to require that no child labor be used when U.S. tax dollars are paying for economic
development projects. What actions will you take moving forward to ensure that relevant DOD contracts will include safeguards so U.S. funding does not subsidize
child labor?
Answer. DOD is committed to promoting stability in Afghanistan responsibly
through strategic business and economic activities. DOD takes this issue very seriously and is committed to our treaty obligations under the International Labor Organization Convention No. 182 on child labor and receives policy guidance from the
U.S. Department of State as the U.S. Governments lead on these issues. The DOD,
through the Task Force for Business and Stability Operations, will continue to work
with the Departments of Labor, Commerce, and State on the issue of child labor in
Afghanistan should it arise in future projects.
QUESTIONS SUBMITTED

BY

SENATOR RICHARD J. DURBIN

Question. How is the Department ensuring that critical, Government-owned and

-operated facilities in the Nations organic industrial base, like Rock Island Arsenal,
are properly and strategically modernized so that these facilities have the equipment and skillsets they need to respond to wartime needs?
Answer. Section 2476 of title 10, United States Code, sets forth a congressional
mandate for minimum capital investments for certain depots of the Department, including the Rock Island Arsenal. Specifically, section 2476 dictates each military department shall invest in each fiscal year in the capital budgets of those depots a
total amount at least equal to 6 percent of the average total combined maintenance,
repair, and overhaul workload funded at all the depots of that military department
for the preceding 3 fiscal years. The Army, for example, has exceeded the 6-percent
threshold with an investment in its facilities of approximately $290 million from fiscal year 2009 through fiscal year 2012.
The Army has developed an Organic Industrial Base Strategic Plan that provides
a disciplined framework for ensuring that all the Armys arsenals and depots remain viable and relevant in a post-war funded environment. The plan addresses a
Capital Investment Strategy that includes investment in new technology, training,
and plant equipment at the same rate that the Army modernizes its weapon systems. The plan is in the final stages of approval by Headquarters Department of
the Army (HQDA).
Further, the Department is mandated under 10 U.S.C. 2464, to maintain a core
depot-level repair capability. The purpose of the core requirement is, among other
things, to ensure a ready and controlled source of technical competence and resources needed to respond to military mobilization, contingencies, and other emergencies. The Department applies and enforces the core requirement through an annual and biennial capability and workload review, completed by the Services, and
reviewed by the Office of the Secretary of Defense. To efficiently maintain maintenance capabilities, DOD facilities, equipment, and personnel accomplish a broad
range of workloads in support of peacetime operations. Most of these workloads involve the maintenance, repair, and overhaul of combat weapons systems and components ensuring a defined skill set and wartime repair capability. Additionally, the
preservation of core capability requires ongoing capital investments consistent with
section 2476 as well as the introduction of new weapon systems.
Question. The Senate and House versions of the National Defense Authorization
Act (NDAA) for fiscal year 2013 each carry authorizations for some of the reforms
you announced earlier this year to combat sexual assault in the military. Is the Department planning for the implementation of those authorized authorities, assuming
they are signed into law? If so, please describe the Departments implementation
timeline.
Answer. The Department is prepared to review and expeditiously implement the
provisions of the fiscal year 2013 NDAA once it is in effect. The proposed Leadership, Education, Accountability and Discipline on Sexual Assault Prevention Act of
2012 (LEAD Act) contains six major elements, each requiring a unique timeline and
implementation plan. Assuming the bill is passed, we offer an approximate timeline
for each element as follows:
Establish Special Victims Capability within each of the services comprised of
specially trained investigators, judge advocates and victim-witness assistance
personnel. Each service have identified and are already training investigators

54
and judge advocates to establish this capability. Following passage, victim witness liaisons will be identified and trained to complete this capability. Once the
fiscal year 2013 NDAA is passed, it will take approximately 6 months to 1 year
for all of the services to have a functioning Special Victims Capability for each
service.
Require that all servicemembers have sexual assault policies explained within
14 days of entrance into active service, educating our newest members right
away to understand our culture will not tolerate sexual assault. Once the fiscal
year 2013 NDAA is passed, this element will take approximately 3 months for
full implementation.
Require a record of the outcome of disciplinary and administrative proceedings
related to sexual assault be centrally located and retained for a period of not
less than 20 years. Once the fiscal year 2013 NDAA is passed, it will take approximately 6 months to 1 year to implement this requirement.
Require Commanders to conduct an annual Organizational Climate assessment,
obtaining information about the positive and negative factors that impact unit
effectiveness and readiness. Once the fiscal year 2013 NDAA is passed, this element can be implemented within a 6-month time period.
Provide Reserve and National Guard personnel who have been sexually assaulted while on active duty to request to remain on active duty or return to
active duty until line of duty determination is done, allowing servicemembers
who file an Unrestricted Report to receive services and/or complete a line of
duty investigation. Once the fiscal year 2013 NDAA is passed, this element will
take approximately 6 months to 1 year to implement.
Require greater availability of information on Sexual Assault Prevention and
Response resources to include DOD workplaces, dining facilities, healthcare,
and residential facilities will have prominently placed Sexual Assault Prevention and Response resources information to assist servicemembers, military dependents, and civilian personnel. Once the fiscal year 2013 NDAA is passed,
this element will take approximately 6 months to implement.
Question. Recently, the Department opened up approximately 14,000 battalionlevel combat-related positions to female servicemembers. What is the Departments
timeframe for examining and possibly reclassifying other combat-related provisions
in order to permit women to serve on a broader basis?
Answer. In March of this year, the Department eliminated the co-location restriction that opened more than 13,000 combat support positions to both men and
women, as well as opened more than 1,000 positions at the battalion level in direct
ground combat units in order to evaluate the performance of women in these positions and inform policy. I have directed the Secretaries of the military departments
to advise me on their evaluations of womens performance in these positions, as well
as any additional positions that can be opened and assessment of remaining barriers
to full implementation of the policy of allowing all servicemembers to serve in any
capacity, based on their abilities and qualifications. This assessment will occur no
later than November 2012.
VISION RESEARCH

Question. In the fiscal year 2013 budget submission, the President requested
$21.374 million for core vision/eye research and all sensor systems.
Would you discuss the importance of this funding?
Answer. Research to improve the prevention, mitigation, treatment, rehabilitation, and restoration of military eye and vision trauma is critically important since
most human activity is visually guided. In current conflicts, eye injuries account for
approximately 15 percent of all battlefield trauma, and have resulted in approximately 183,000 ambulatory and more than 4,000 hospitalized cases involving eye injury. In addition to injuries that blind or impair vision immediately, hidden injuries
such as retinal breaks, iris disinsertion, lens damage, and optic nerve trauma have
been found to go undetected at the time of the battlefield trauma and dramatically
increase the risk of future vision loss. Even in the absence of direct eye injury, blast
exposures, concussions, and traumatic brain injuries (TBI) cause visual and associated vestibular neurosensory dysfunction in 75 percent of exposed individuals. All
of these problems negatively affect the ability of servicemembers and veterans to reintegrate in both military and post-service employment and life skills.
The DOD/Veterans Affairs (VA) Vision Center of Excellence has been a leader in
the analysis of research gaps in blindness and vision impairment, including TBI-related vision syndrome. Under the aegis of its Vision Research Portfolio (VRP), DOD
has developed a comprehensive inventory of needed research in blindness, vision im-

55
pairment, and TBI-related visual neurosensory dysfunctions caused by military
trauma. The range of these research topics spans:
the discovery of better methods of protecting deployed individuals, improved
battlefield treatments that will save the sight of the wounded;
development of long-term treatments for chronic visual dysfunctions;
the need for better surveillance tools for as yet undetected problems; and
developing valid approaches to the restoration of sight.
At present, vision restoration is in its infancy compared to other areas of prosthetics, such as amputations, where dramatic strides are continually being made.
We are fortunate that VRP funding announcements are being met by research proposals of the highest quality, which will greatly benefit the care of our
servicemembers and veterans. We have an obligation to our servicemembers and
veterans to ensure that they have access to our best possible solutions for their
readiness, ocular health and visual quality of life. Maintaining and enhancing funding of DOD research targeted to these areas is a critical need.

QUESTIONS SUBMITTED

BY

SENATOR DIANNE FEINSTEIN

UNITED STATES RELATIONSHIP WITH PAKISTAN

Question. Last month, at the full Committee mark-up of the fiscal year 2013 State
and Foreign Operations appropriations bill, this Committee cut $33 million in Foreign Military Financing for Pakistan to protest the 33-year prison sentence for Doctor Shakil Afridi, who helped the United States track down Osama bin Laden.
What are your current views on United States foreign assistance to Pakistan and
how do you see the United States-Pakistan relationship at this time?
Answer. The United States-Pakistan relationship is fundamental to our vital national security interests. We need to cooperate with Pakistan on defeating al-Qaeda,
supporting Pakistani stability, and reaching a lasting peace in Afghanistan. I support assistance to Pakistan that is targeted at achieving our core interests and sustaining our engagementcivilian and militarywith the Government of Pakistan.
By comparison, cutting off assistance to Pakistan in 1990 led to an era of decreased
engagement which still adversely affects our relationship today.
The Department of Defense (DOD) programsespecially Coalition Support Fund
reimbursementswill play an important role in re-starting our engagement with
Pakistan as we seek a way forward on advancing broader United States national
security interests. Passing amendments limiting assistance to Pakistan will jeopardize our ongoing discussions on all avenues of cooperation, including the ground
lines of communication (GLOC) negotiations. If we can restart the relationship, the
next year would require that we be flexible enough to respond to potential additional strains that may occur, and to take advantage of any improvement in Pakistans willingness to cooperate on issues that advance United States national interests. Any conditions applied to DOD programs for Pakistan should, therefore, be designed to support these interests. Funding restrictions or unachievable certification
requirements for those programs would have direct, negative consequences on our
core interests, our strategic posture in Afghanistan, and long-term regional stability.
Question. What do you see happening with the border situation in Pakistan? Are
we able to resupply our troops in Afghanistan without using the Pakistani border?
Answer. Weand our North Atlantic Treaty Organization (NATO)/International
Security Assistance Forces (ISAF) partnershave been able to support our forces
in Afghanistan during the closure of the Pakistan-based GLOC since late November.
However, we have done so by relying heavily on northern distribution network
(NDN) lines of communication as well as costly, multimodal shipments using rail
and air. Maintaining redundant supply routes into Afghanistan, including the Pakistan GLOC, will enable logistics flexibility at a critical time for coalition forces.
Working with Pakistan to open the GLOC will reduce the burden on the United
States taxpayer, will allow us to transit supplies to forces more quickly, and will
be important for United States and coalition retrograde from Afghanistan and
equipping of Afghan National Security Forces (ANSF).
Question. When will the administration finally declare the Haqqani Network a
Foreign Terrorist Organization (FTO)?
Answer. The authority to make FTO designations rests with the Secretary of
State. I understand that Secretary Hillary Clinton is undertaking a review of an
FTO designation of the Haqqani Network, and I defer to her on the results of that
review.

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SOUTH CHINA SEAS

Question. Secretary Clinton has stated that the peaceful resolution of disputes in
the South China Sea is in the national interest of the United States, and that multilateral solutions should be pursued. In response, the Peoples Liberation Army insisted that China had indisputable sovereignty over the sea, though it would allow
freedom of navigation.
What is your assessment of Chinas behavior in the South China Sea?
Answer. My assessment is that China should clarify the nature of its claims in
the South China Sea and resolve disputes through diplomatic means consistent with
international law without coercion or the threat or use of force. We encourage China
to work with Association of Southeast Asian Nations (ASEAN) on developing a binding code of conduct for behavior in the South China Sea and to work toward the
peaceful settlement of territorial disputes. It is long-standing U.S. policy that we do
not take a position on specific territorial disputes, and we have consistently called
upon all parties to clarify their claims in the South China Sea in terms consistent
with international law. Finally, it is important that China recognize and respect the
full breadth of high seas freedoms in its exclusive economic zone (EEZ), which includes the freedoms of navigation and overflight and other internationally lawful
uses of the seas related to these freedoms.
The region and the world are watching the situation in the South China Sea carefully, and forming impressions based on how claimant states manage these disagreements.
Question. Who is driving this assertiveness, the military or civilian leadership?
Answer. We have questions about the level of coordination between the political
and military leadership in China, and suspect there are areas of friction between
them. However, we believe that recent actions taken in the South China Sea are
in accordance with the broader goals of the civilian leadership and do not represent
a rift within Chinas leadership. The Peoples Liberation Armys (PLA) top decisionmaking body, the Central Military Commission, remains subordinate to civilian
leadership. Chinas consensus driven decisionmaking process continues to prevent
one entity from challenging the status quo.
Question. How concerned are you that an incident in the South China Sea, such
as the current standoff between China and the Philippines over the Scarborough
Shoal, could erupt into a wider conflict that could drag in the United States?
Answer. We are watching the situation in the South China Sea closely, and support a collaborative diplomatic process by all claimants to resolve disputes. The
United States opposes the use or threat of force or coercion by any claimant in pursuing its claims. We support ASEAN and Chinas efforts to negotiate a full code of
conduct that:
is based on the principles of the U.N. Charter, customary international law as
reflected in the Law of the Sea Convention, the Treaty of Amity and Cooperation, and the Declaration on Conduct; and
creates a rules-based framework for managing and regulating the conduct of
parties in the South China Sea, including preventing and managing disputes.
To reduce the risk of conflict in the South China Sea, I believe the United States
should use its position in several regional organizations, including the East Asia
Summit, the ASEAN Regional Forum, and the ASEAN Defense Ministers Meeting
Plus, to facilitate initiatives and confidence-building measures that will help claimant states reach an agreement on a binding code of conduct in the South China Sea.
Additionally, the United States should continue serving as a positive example of a
nation that adheres to recognized international norms of behavior through policy
implementation, effective training, and proper accountability. These include the
rules of the road, such as the International Regulations for Preventing Collisions
at Sea (COLREGs), the International Convention for the Safety of Life at Sea
(SOLAS), and other established international safety and communication procedures,
such as the Code for Unalerted Encounters at Sea (CUES). The United States
should also encourage all South China Sea claimants to abide by these behavioral
norms to ensure greater operational safety and reduce the risk of dangerous incidents at sea.
Question. What lines of communication do we have with Chinas military in a crisis situation and are they sufficient?
Answer. DOD maintains contact with the PLA through a variety of mechanisms,
including Chinas Defense Attache Office at its Embassy in Washington and the
U.S. Defense Attache Office at the U.S. Embassy in Beijing. Additionally, in 2007,
a Defense Telephone Link (DTL) was established between the United States and
China, intended for exchanges between the United States Secretary of Defense and
Chinas Minister of National Defense. Secretary of Defense Gates made the first call

57
to his counterpart in April 2008. We seek a military-to-military relationship with
China that is healthy, stable, reliable, and continuousthese lines of communication, which are sufficient, help us meet that goal.
AFGHANISTAN

Question. The number of U.S. forces will be reduced to 68,000 by September, down
from a peak of approximately 100,000 in June 2011. President Obama has said that
further reductions will continue at a steady pace until the end of 2014 when Afghan forces will assume full responsibility for the security of their country.
What factors will influence the pace of additional reductions?
Answer. The recovery of the final 23,000 surge forces is expected to be completed
by September 2012. Following the completion of the surge recovery, fewer than
68,000 U.S. military personnel will remain, as laid out in the Presidents surge plan.
As DOD senior leaders have stated many times, any future decisions on force reductions will be conditions based. This fall, General Allen will prepare his 2012 fighting
season analysis, assessment of the Afghan National Security Forces (ANSF) readiness, and will develop and assess options for post-surge force levels.
General Allens assessment and recommendations will inform, along with the
Chairmans military advice, my recommendations to the President. Primary considerations include the capabilities of both the ANSF and the insurgency, the overall
security situation across the country at the end of the 2012 fighting season, and the
projected 2013 security environment. Security must be considered along with other
factors, such as progress in transitioning districts and Afghan governance development. The security transition process will be particularly important, as Afghanistan
prepares for the final two tranches of Afghan districts that will enter transition. We
must ensure we have the right mix of United States, International Security Assistance Force (ISAF), and ANSF units available to allow the Afghan forces to assume
the lead in these last transitioning districts. Finally, General Allen will assess the
required composition of U.S. forces on the ground in order to achieve the correct balance of conventional, security force assistance, special operations, and enabling
forces for the future security environment.
Question. Are Afghan forces still on track to take the lead in security matters by
mid-2013?
Answer. ANSF remain on schedule to assume the lead for security in Afghanistan
in 2013 once Tranche 5 districts begin transition. The ANSF continue to grow in
capability and size and are increasingly taking the lead in planning and conducting
operations. Both the Afghan National Army (ANA) and Afghan National Police are
becoming increasingly independent, and the ANA are in the process of establishing
its first division-sized special operations forces unit.
Tranche 3 districts will begin transition in July 2012 and at that time more than
75 percent of the Afghan population will live in areas where the ANSF are in the
lead for security. We expect the Afghan Government to announce the districts composing Tranche 4 this winter and Tranche 5 in mid-2013. Additionally, security conditions are assessed as stable in locations where Afghan forces have assumed a lead
security role. In 2012, enemy-initiated attacks in transitioning districts have fallen
year to date overall by approximately 15 percent from 2011 levels.
Question. How confident are you that they will be able to assume and sustain the
lead for security matters?
Answer. ANSF remain on schedule to assume and maintain the lead for security
matters. The ANSF are on track to assume lead security across Afghanistan as
Tranche 5 is implemented in 2013. The International Security Assistance Force
(ISAF) will continue to train, advise, and assist the ANSF as transition process continues through the end of 2014. At that Point, the Afghans will assume full responsibility for security in Afghanistan in accordance with the Lisbon transition strategy
and timeline.
However, the international community will not end its commitment to Afghanistan in 2014. The North Atlantic Treaty Organization (NATO) Summit in Chicago
reaffirmed the international communitys enduring commitment to Afghanistan. The
United States remains committed to a mission that trains, advises, and assists Afghan forces post-2014, as expressed in the Strategic Partnership Agreement signed
in May 2012. The United States and Afghanistan are committed to a series of 6month reviews to assess the development and structure of the ANSF. These collaborative reviews will ensure that the ANSF size and force structure are suitable and
sustainable for the projected security environment.
Question. What is your current assessment of the ability of Afghan forces to assume full responsibility for security matters by the end of 2014?

58
Answer. ANSF are currently on track to assume full responsibility for security in
Afghanistan by the end of 2014, in accordance with the timeline agreed to at the
NATO Lisbon Summit, and as reaffirmed at the NATO Chicago Summit. The ANSF
are on track to reach their October 2012 goal of 352,000 personnel. The ANSF also
continue to grow in capability. Currently, more than 90 percent of all combat operations are partnered between ANSF and ISAF forces, and the ANSF have the lead
for more than 50 percent of these operations. Additionally, the ANSF have increasingly been accepting custody of detainees detained by U.S. forces and are taking the
lead in the conduct of special operations.
THE UNITED STATES-AFGHANISTAN STRATEGIC PARTNERSHIP AGREEMENT

Question. The U.S.-Afghanistan Strategic Partnership Agreement would allow

U.S. forces to remain in Afghanistan after 2014 for training Afghan security forces
and targeting al-Qaeda.
How many U.S. troops do you anticipate will remain in Afghanistan after 2014?
Answer. The United States, along with its NATO allies, intends to maintain an
enduring presence to support the continued training and development of the Afghan
National Security Forces (ANSF), and to engage in counterterrorism efforts aimed
at combating al-Qaeda and its affiliates. Future force-level requirements will be determined by taking into account what assets are needed to support those missions,
and will be guided by the need to ensure that Afghanistan has the ability to secure
itself against internal and external threats.
Towards that end, an Afghanistan-U.S. Bilateral Commission was established
under the Strategic Partnership Agreement (SPA) to advance cooperation and monitor progress toward implementing the SPA. A U.S.-Afghanistan Working Group on
Defense and Security will conduct regular assessments of the threat level facing Afghanistan, as well as Afghanistans security and defense requirements. This working group will make recommendations about future cooperation between the United
States and Afghanistan on Afghanistans security and defense requirements. Recommendations will be made to the Bilateral Commission.
The nature and scope of the future presence and operations of U.S. forces are expected to be addressed in a future U.S.-Afghanistan Bilateral Security Agreement.
Question. How long will they be engaged in the missions described in the Agreement?
Answer. The Strategic Partnership Agreement will remain in force through 2024.
The United States is committed to seek funds on a yearly basis during that period
to support the missions described in the Agreement. The duration and nature of our
enduring presence will be determined through an examination of what assets are
needed to support the sustainment of ANSF, and U.S. counterterrorism efforts
against al-Qaeda and its affiliates.
Towards that end, an Afghanistan-U.S. Bilateral Commission was established
under SPA to advance cooperation and monitor progress in the implementation of
the SPA. A U.S.-Afghanistan Working Group on Defense and Security will conduct
regular assessments of the threat level in Afghanistan as well as Afghanistans security and defense requirements. The nature and scope of the future presence and
operations of U.S. forces is expected to be addressed in a future U.S.-Afghanistan
Bilateral Security Agreement.
The SPA was designed to provide a long-term political framework for relations between the United States and Afghanistan that promotes the strengthening of Afghan sovereignty, stability, and prosperity, and that contributes to the shared goal
of defeating al-Qaeda and its extremist affiliates. The enduring partnership established by the SPA sends a clear signal to the Afghan people that they are not alone
as they take greater responsibility for their country.
Question. What will be the major challenges to concluding a Bilateral Security Arrangement to supersede our Status of Forces Agreement?
Answer. As with other negotiations, we generally do not publicly discuss U.S. negotiating positions, nor those of our negotiating partners. The Bilateral Security
Agreement (BSA) is expected to set the parameters for the nature and scope of the
future presence and operations of U.S. forces in Afghanistan, and the related obligations of Afghanistan and the United States.
There are a number of elements common to most status of forces agreements
(SOFAs). SOFAs typically address the majority of day-to-day issues that may arise
regarding the presence of U.S. forces in a host nation. As a result, SOFAs generally
include provisions addressing criminal and civil jurisdiction over U.S. forces and
DOD civilian personnel, use of agreed facilities and areas, movement of vehicles, tax
and customs exemptions, contracting procedures, access to and use of utilities and
communications, and entry into and exit from the host nation, among others.

59
The BSA will also take into account the particular circumstances and requirements of U.S. forces in Afghanistan, such as continued access to and use of Afghan
facilities for the purposes of combating al-Qaeda and its affiliates, training the
ANSF, and other mutually determined missions to advance shared security interests. The transfer of U.S. detention facilities and the conduct of special operations,
currently guided by U.S.-Afghanistan memoranda of understanding, may also be
issues that are discussed during the BSA negotiations.
Question. The Agreement requires the administration to seek funding from the
Congress for the training, equipping, advising and sustaining of Afghan National
Security Forces, as well as for social and economic assistance.
How much will this cost?
Answer. Preliminary plans for the long-term training, equipping, advising, and
sustaining of the ANSF call for an estimated annual budget of $4.1 billion. The plan
calls for the ANSF to achieve a surge strength of 352,000 personnel by October
2012, which would be sustained through 2015 before drawing down to a sustainable
long-term force by 2017. We have received commitments and pledges from the Afghan Government and the international community to assist in funding the ANSF,
and we will continue to pursue international contributions in the future. We will
also continue to work closely with the Government of Afghanistan and our allies
and partners to evaluate the security conditions on the ground that may alter the
assessment of future ANSF structure and the associated budget estimate.
Question. How confident are you that our NATO partners will contribute and the
United States will not be left with the whole bill?
Answer. At the 2012 NATO Summit in Chicago, our NATO allies and other international partners reaffirmed their strong commitment to an enduring partnership
with Afghanistan that will last beyond the transition of full security responsibility
to the Afghan forces by the end of 2014. The Afghan Government pledged to provide
at least $500 million a year for the ANSF beginning in 2015 and to increase this
amount progressively over time as its economy continues to grow. The international
community also recognized Afghanistans current economic and fiscal constraints
and pledged to provide significant additional funding.
Additionally, over the past 6 months, Afghanistan has signed partnership agreements with a number of other countries around the world, many of them NATO allies and ISAF partners, including:
the United Kingdom;
France;
Italy;
Germany;
Norway;
Australia; and
India.
Afghanistan is also negotiating a long-term partnership agreement with the European Union. We believe this web of long-term partnerships will help support Afghanistan after the security transition, ensuring that the international community
remains engaged in support of the Afghan people in the years following the conclusion of ISAFs mission.
The international community continued to show its support at the recent conference on Afghanistans continued economic and social development after 2014, the
Tokyo Conference, agreeing to provide $16 billion in civilian aid over 4 years.
AFGHANISTANCOUNTERNARCOTICS

Question. The drug trade is a major source of Taliban funding, with the U.N. Office on Drugs and Crime estimating that in 2009, the Taliban earned about $155
million from the drug trade by taxing farmers, shopkeepers, and traffickers in return for security protection. The Helmand Food Zone is generally regarded as a success in reducing poppy cultivation. The administration has indicated support for expanding this program; however, this depends on international funding, local political
will, and especially security.
With the 2014 U.S. departure date, what steps is your Department taking to limit
poppy cultivation and drug profits to the Taliban following the U.S. withdrawal?
Answer. We continue to build the Afghan capacity to counter the drug trade and
reduce drug-related income to the Taliban. United States forces have trained units
within the Counternarcotics Police of Afghanistan that are currently capable of conducting counternarcotics (CN) operations with limited enablers from Coalition
forces. We have built aviation enablers for the CN effort that will be merged with
aviation assets to support the Afghan counterterrorism effort. Training for this unit
includes operations that insert CN forces under the cover of darkness.

60
United States forces in Afghanistan do not directly support poppy eradication efforts other than to provide in extremis support to eradication teams under attack,
consistent with North Atlantic Treaty Organization (NATO)/International Security
Assistance Forces (ISAF) policy. The U.S. Department of State supports the Afghan
Governments Governor Led Eradication (GLE) program. While final, verified results are not available for the GLE at this time, the program is on track to more
than double last years result of 3,810 hectares of poppy eradicated.
I believe that the eradication effort must be carefully planned to inflict the most
damage on major drug producers poppy crop and include alternative livelihood efforts to provide poor farmers with an alternative to poppy cultivation. This requires
a whole-of-government approach led by the Afghan Government with enabling support from the U.S. Government.
Question. What programs and methods do you see as most effective in curbing Afghan drug production and Taliban involvement in the drug trade given the security
situation in Afghanistan and the impending departure of international troops?
Answer. I believe the most effective method in reducing the Afghan illicit drug
production, and the Talibans involvement in the drug trade has been conducting
joint military and law enforcement operations against key nexus targets and involving the Afghans in these operations. The counter narco-terrorist effort, however,
must engage a whole-of-government approach. All of the tools to engage the drug
trade must be coordinated to achieve the greatest effect. The Afghan Government
outreach to farmers occurs in the fall when farmers are determining what crops
they will plant for the next season. The Afghan Government should strongly push
tribal elders and farmers to not plant poppy. Alternative development needs to be
available to farmers so they have support for other options over growing poppy.
Eradication needs to target wealthy land owners that gain the most profit from
poppy production. Corrupt Afghan Government officials involved in the drug trade
and those police forces establishing unauthorized road checkpoints and harassing
farmers as they try to get their licit produce to market, should be arrested and tried
in a court of law without political interference. We need to continue to train and
mentor Afghan CN forces so they can take on this responsibility. Security will be
key, and the Afghan security forces need to be up for the task.
The U.S. Government will need to continue to support the CN effort in Afghanistan post 2014 including continuing to build the Afghan CN capacity and providing
enabling support.
Question. As the Chair of the Senate Caucus on International Narcotics Control,
I have concerns that illicit drug organizations will proliferate and increase aggression towards remaining United States and Afghan CN personnel following a military withdrawal.
Given the link between drug trafficking organizations and terrorist organizations,
can you advise the future role the Department of Defense (DOD) will have in a post
withdrawal era in supporting CN efforts in the Afghanistan region?
Answer. Over the past 8 years, DOD has worked closely with other U.S. departments and agencies to build the Afghan CN capacity primarily with specialized
units. We seek to expand that capacity to the provincial-level forces for greater effect. We have also built enablers, specifically an aviation capacity, that is currently
being merged with Afghan counterterrorism efforts. U.S. Special Operations Forces
are expected to continue to operate in Afghanistan beyond 2014 and could support
training and mentoring the Afghan CN forces.
DOD has also been building CN capacity within the region, specifically in Central
Asia. This support has focused on border security operations in an attempt to interdict drug shipments from Afghanistan into and through Central Asia. DODs CN efforts in Pakistan have been limited lately, although we have supported the U.S.
Drug Enforcement Administrations efforts to build the capacity of Pakistans AntiNarcotics Force. I look forward to the potential of providing more support to the
Pakistan coastal forces and assisting them with training and equipment in support
of drug interdiction operations at sea.
Subject to funding being provided, DOD will continue to support CN efforts in Afghanistan and the region.
TAIWAN AND F16S

Senator Cornyn agreed to lift his hold on the nomination of Mark Lippert to be
the next Assistant Secretary of Defense for Asian and Pacific Security Affairs after
he received a letter from the administration indicating that it would give serious
consideration to a proposal to sell Taiwan 66 new F16 fighters. Last year, the administration declined to sell the new F16s to Taiwan and, instead, agreed to a $5.8
billion upgrade of Taiwans existing fleet of F16s. Senator Cornyn and others de-

61
nounced the administrations decision arguing that Taiwan needed the newer F16s
to better match Chinas air superiority. China strongly opposes the sale of new F
16s to Taiwan.
Question. What does serious consideration mean?
Answer. The Taiwan Relations Act provides that . . . the United States will
make available to Taiwan such defense articles and defense services in such quantity as may be necessary to enable Taiwan to maintain a sufficient self-defense capability. The Department of Defense takes this responsibility seriously and endeavors to work closely with the interagency to evaluate Taiwans needs and provide recommendations to the President on what defense articles and services are appropriate for Taiwan.
Recommendations are based on the projected threat from the mainland and an
evaluation of the China-Taiwan relationshippolitical and militarywhich is an
on-going process.
Question. Has the security situation across the straits changed significantly since
the administration agreed to upgrade Taiwans existing fleet of F16 A/B models?
Answer. No. As detailed in the 2012 report to Congress on the Military and Security Developments Involving the Peoples Republic of China (PRC), the Peoples Liberation Army continues to focus on building the capacity to coerce Taiwan to reunify
with the PRC. In light of Chinas continued development and deployment of advanced weapons systems to the military regions opposite Taiwan, we judge that the
military balance continues to shift in the mainlands favor.
Question. I understand that there is not much difference in capabilities between
the upgraded F16 A/B models and the new F16 C/D models.
What new capabilities would the C/D models provide?
Answer. The U.S. Government-approved F16 A/B retrofit capabilities are very
similar to those featured in new F16 C/Ds. The F16 A/B retrofit will enhance avionics, survivability, combat effectiveness, and the cockpit environment of Taiwans
current fleet of F16s, as well as contribute to the refurbishment of aging structural
airframe components. F16 C/D has a more robust engine and an option for conformal fuel tanks providing additional fuel capacity.
Question. What threats would they respond to?
Answer. The F16 is a combat aircraft capable of providing air-to-air combat and
air-to-surface support. F16s provide Taiwan the capability to defend the island
against air attacks.
Question. What significant action could China take to ease its military posture in
the strait in a manner that was substantive enough for you to consider or reconsider
the future arms sales to Taiwan?
Answer. The Taiwan Relations Act provides that the United States will make
available to Taiwan such defense articles and defense services in such quantity as
may be necessary to enable Taiwan to maintain a sufficient self-defense capability.
Evaluation of the China-Taiwan relationshippolitical and militaryis an on-going
process; sales of arms and defense services to Taiwan are evaluated in this context.
DOD along with other U.S. departments and agencies provide recommendations
to the President on what defense articles and services are appropriate for Taiwan.
DOD bases its recommendations on the projected threat from the mainland. This
threat is steadily increasing across multiple mission areas.
Chinas Anti-Secession Law, expansive military, and extensive doctrine and plans
to invade Taiwan leave little doubt about Chinas intentions. China would need to
make significant and permanent changes to its military that would reduce the
threat to Taiwan. DOD has not seen any indications that would imply that China
is currently making the necessary changes that would cause DOD to reconsider future arms sales to Taiwan.
AL-QAEDA THREATS IN AFRICA

Question. For the past few years, al-Qaeda in the Islamic Maghreb (AQIM) has
been almost an afterthought, but obviously DOD is actively working to defeat alQaeda wherever they find a safehaven.
What threat does AQIM pose in light of the current instability in North Africa?
Answer. AQIM is a regional affiliate of al-Qaeda and the Department takes the
threat it poses very seriously. DOD works to build the capacity of front line states,
like Mauritania, Niger, and others, to counter the threat posed by the group. The
fluid political situation in North Africa and the Saheland the limited ability of
governments to control their territoryraises the possibility that AQIM could enjoy
greater freedom of movement. That freedom of movement might enable the group
to more effectively target local, U.S., and other Western interests.

62
Question. Do you see indications of links among AQIM, al-Shabaab in Somalia,
and al-Qaeda in the Arabian Peninsula (AQAP) in Yemen?
Answer. We are always concerned about the possibility that regional terrorist organizations will cooperate and share capabilities. A classified answer to this question is being provided separately
NUCLEAR WEAPONS

Question. The House fiscal year 2013 Defense Authorization bill contains a number of troubling provisions related to nuclear weapons:
if the President does not spend $88 billion to upgrade our nuclear labs and $125
billion over 10 years to replace aging bombers, submarines, and land-based missiles our reductions to our nuclear stockpile mandated by the New Strategic
Arms Reduction Treaty (New START) would be halted;
it places significant restrictions on reducing or withdrawing tactical nuclear
weapons in Europe and mandates a report on re-introducing these weapons in
South Korea; and
it would provide $160 million for a new plutonium facility the National Nuclear
Security Administration (NNSA) says it does not need.
If the United States ceased complying with the terms of the New START agreement, how would Russia respond?
Answer. I can only speculate how Russia might respond if, for some reason, the
United States were forced to cease complying with the terms of the New START.
Russia might choose to delay or halt its own compliance activities. This would leave
open the possibility that Russia might act to increase the size of its nuclear forces
above the New START Treaty (NST) limits.
Question. What would be the long-term impact on our strategic relationship with
Russia?
Answer. The most probable long-term impact of withdrawing from the NST would
be a weaker and more unpredictable strategic relationship with Russia because of
the increased uncertainty that would come from reduced transparency. NST provides both the United States and Russia with a degree of transparency that helps
promote strategic stability. For both the United States and Russia, accurate knowledge of each others nuclear forces helps to prevent the risks of misunderstanding,
mistrust, and worst-case analysis and policymaking.
It is important to note that greater instability in the United States-Russian relationship would have an impact on others, including our allies (who highly prize strategic predictability) and China (which might perceive a need to significantly increase its forces).
Question. What would be the impact on our ability to convince Iran and North
Korea to forgo their nuclear programs?
Answer. It is unclear what, if any, impact a hypothetical United States withdrawal from NST would have on Iran and North Korea. Both countries desire to
possess weapons of mass destruction not because of U.S. nuclear capability, but because of the conventional superiority of the United States and its allies and partners. However, as we negotiate to encourage both Iran and North Korea to abandon
nuclear weapon programs, a hypothetical United States withdrawal from its NST
commitments could work against efforts because it would create a negative image
of the United States commitment to its own international obligations.
SEQUESTRATION

Question. Secretary Panetta, Im going to paraphrase some points you made in a

letter you sent to Senator McCain this past November as follows:
. . . the reduction in defense spending under maximum sequestration would
amount to 23 percent if the President exercised his authority to exempt military
personnel.
. . . Under current law, that 23 percent reduction would have to be applied
equally to each major investment and construction program and would render
most of our ship and construction projects unexecutableyou cannot buy three
quarters of a ship or a building.; and
. . . We would also be forced to separate many of our civilian personnel involuntarily and, because the reduction would be imposed so quickly, we would almost certainly have to furlough civilians in order to meet the target.
Secretary Panetta, has Office of Management and Budget (OMB) provided further
clarification on how the cuts would be applied to our accounts and do you still believe if the President does exempt our military personnel that the reductions would
still amount to 23 percent, and we would need to furlough civilians?

63
Answer. As of June 13, 2012, OMB has not provided further clarification. Should
the President exempt military personnel, our best estimate at this time is the reductions will amount to around 23 percent. We strongly believe the Congress should
act to halt sequestration. We have not announced reductions-in-force or furloughs
and will make that decision if and when we have to implement the sequestration
reductions.
PRESCRIPTION DRUG ABUSE

Question. The Department of Defense (DOD) has utilized the Pharmacy Data
Transaction Service (PDTS) that records information about prescriptions filled
worldwide for Defense Department beneficiaries. However, I understand that DOD
does not currently share this information with State Prescription Drug Monitoring
Programs (PDMP) at Defense Department hospitals and facilities. Sharing of this
information would help to prevent an individual from obtaining a prescription from
a private hospital then receiving that same prescription at a Defense Department
hospital.
When does DOD plan to implement guidelines to allow prescription drug information sharing with state prescription drug monitoring programs?
Answer. PDTS records information about prescriptions filled for DOD beneficiaries through medical treatment facilities (MTFs), TRICARE Retail Network
Pharmacies and the mail order pharmacy (MOP) program. PDTS conducts on-line,
real-time prospective drug utilization review (clinical screening) against a patients
complete medication history for each new or refilled prescription before it is dispensed to the patient. The clinical screenings identify potential patient safety, quality issues, or drug duplication issues which are immediately resolved to ensure the
patient receives safe and quality care.
DOD is currently sharing data with PDMP through the TRICARE Mail Order
Pharmacy and Retail Network Pharmacies. However, the MTF pharmacies, in general, have not been sharing information with State PDMPs due to lack of information technology (IT) capability to interface with the 50 different programs and 50
different sets of requirements for accessing the States systems. The challenge remains that there is not a national standard for PMDPs, and the State programs are
at varying levels of maturity, operationally and technologically. Each State controls
who will have access and for what purpose. Since the State PMDPs requirements
are inconsistent, DOD as a single, Federal entity, cannot conform to 50 different
PMDP standards. In addition, information sharing is limited because access to
PDMPs is usually limited to providers who are licensed in the State. Since MTF
providers who work on Federal facilities are only required to have one State license,
and generally not licensed in the State in which the facility is located; therefore,
they typically do not have access to the PDMP prescription data.
TRICARE Management Activity (TMA) Pharmaceutical Operations Directorate
(POD) is currently assessing various technical approaches and levels of effort (i.e.,
funding requirements) to determine the best solution for MTF data sharing with
State PMDPs. TMA is looking at the best file format and data transfer mechanisms
to support this effort and what the costs to DOD will be. TMA and the services are
assessing current policies, Federal legislation, and privacy considerations (i.e.,
Health Insurance Portability and Accountability Act (HIPAA)) to determine the best
approach for participation in the various PMDPs by MTF pharmacies. In addition,
TMA POD and the contractor that supports PDTS are currently working on an approach to support the State PMDPs and determine if there are any privacy and
legal requirements/implications. Once the Government approves the approach, a
rough order of magnitude cost estimate will be developed. The TMA POD anticipates determination of the level of effort for supporting PDMPs by October 2012.
EVOLVED EXPENDABLE LAUNCH VEHICLE

Question. Secretary Panetta, I am concerned that the Air Force is entering into
an acquisition strategy on the Evolved Expendable Launch Vehicle (EELV) program
that will prevent new entrants to compete prior to fiscal year 2018.
Have you looked at the terms and conditions of this proposed contract structure
and can you guarantee the Government can walk away without any liability from
the contract if new entrants become certified prior to fiscal year 2018?
Answer. The terms and conditions of the proposed contract have been reviewed.
The Air Forces plan expects new entrants, as soon as they are certified, to compete
for National Security Space launch missions not covered under EELVs Phase I minimum commitment. Thus, there is no need for the Government to walk away from
its existing contractual commitments.

64
QUESTION SUBMITTED

BY

SENATOR HERB KOHL

Question. The administration has announced a new strategy focused on Asia and
the Pacific Ocean. Part of this strategy includes deploying the USS Freedom to
Singapore. The Freedom is the first of what we hope will be many littoral combat
ships (LCSs) built in Wisconsin.
The Navy has on many occasions described the LCS as one of the backbones of
our Nations future fleet. Do you believe, as I believe, that the LCS is indeed a key
part of executing our new defense strategy?
Answer. LCS is a key component of the Navys current and future force and will
fulfill multiple mission requirements of the Defense Strategic Guidance (DSG). LCS
will meet warfighting needs in the areas of mine countermeasures, anti-submarine
warfare, and anti-swarm defense to counter adversary anti-access/area-denial efforts. Beyond the warfighting demands, these ships will also be called upon to defend the homeland by conducting maritime intercept operations; providing a stabilizing presence by building partner capacity, strengthening alliances and increasing
U.S. influence; and conducting stability and counterinsurgency operations through
security force assistance and other engagement missions. Owing to their speed,
smaller size, and relatively shallow draft, these ships offer partner navies compatible ships with which to operate on a more equivalent basis.
QUESTIONS SUBMITTED

BY

SENATOR MITCH MCCONNELL

Question. Please list the 15 oldest hospitals that are still in use at domestic U.S.
Army installations.
Answer.
Name

Ireland Army Community Hospital ....................................................................................

Irwin Army Community Hospital .......................................................................................
Martin Army Community Hospital ....................................................................................
General Leonard Wood Army Community Hospital ...........................................................
Darnall Army Medical Center ...........................................................................................
Weed Army Community Hospital ......................................................................................
William Beaumont Army Medical Center ..........................................................................
Moncrief Army Community Hospital .................................................................................
Eisenhower Army Medical Center .....................................................................................
Keller Army Community Hospital ......................................................................................
Blanchfield Army Community Hospital .............................................................................
Winn Army Community Hospital .......................................................................................
Bayne-Jones Army Community Hospital ...........................................................................
Evans Army Community Hospital .....................................................................................
Madigan Army Medical Center .........................................................................................

Acquisition date

1957
1957
1958
1965
1966
1968
1972
1972
1975
1977
1982
1983
1983
1986
1990

(Fort Knox).
(Fort Riley).
(Fort Benning).
(Fort LW).
(Fort Hood).
(Fort Irwin).
(Fort Bliss).
(Fort Jackson).
(Fort Gordon).
(West Point).
(Fort Campbell).
(Fort Stewart).
(Fort Polk).
(Fort Carson).
(Joint Base Lewis McCord).

Question. Please also provide clarification on the criteria the Army uses for determining the need for replacing hospitals on U.S. military installations. What thresholds need to be met to justify a hospital replacement?
Answer. The TRICARE Management Activity (TMA) uses a Capital Investment
Decision Model (CIDM) to support validation of facility requirements, ensure that
facility investments are aligned with the Military Health System priorities and strategic goals, and improve inter-service and inter-agency collaboration. CIDM criteria
include:
Mission change needs (e.g., change in scope of clinical services to be provided,
increases or additions to programs, implementation of new care delivery models). Externally imposed changes, such as population changes in the Army stationing plan or unit re-stationing plans, are considered when identifying locations that require facility projects.
Collaborative synergies (e.g., the extent that the facility is a constraint to
achieving greater collaboration and integration among the Departments of Defense (DOD), Veterans Affairs (VA), other Federal agencies, or the private sector).
Location constraints (e.g., remoteness, medically underserved).
Effectiveness of infrastructure (e.g., physical and functional deficiencies).
Life, health, or safety issues that cannot be addressed through Sustainment,
Restoration and Modernization resources.
The CIDM provides the multi-faceted threshold for facility scoring that is used by
a tri-service Capital Investment Review Board (CIRB) to derive an Order of Merit

65
list (OML). The OML supports the determination of which hospital will be replaced
and in what order.
Question. Last, when analyzing a hospitals usage data, does the Army also take
into account the number of military patients who would prefer to receive care at
a medical facility on-base, but who are unable to do so because services and specialists are not currently available?
Answer. The Army medical planning process is designed to support the mission
of the medical facility by focusing on the staff and the space available to support
the population and workload demand. A market analysis is conducted to review the
availability of healthcare providers and services in the market, as well as the utilization of these services by the beneficiary population. The combination of site/facility and market analysis drives the requirements for facility planning. Market utilization serves as a proxy for health services demand. Beneficiary preference is not
explicitly considered as part of this process.
Question. I am told that the Navy has not modernized the Mk 45 large caliber
naval gundesigned in the mid-1970salthough it was apparently intended to
have an overhaul after 15 years of service.
Can you please explain why the Navy has modernized similarly aged guns on Destroyer ships, but has not overhauled or upgraded Mk 45 guns on Cruiser ships?
Are there any plans to overhaul or upgrade these guns?
More generally, is the Navy concerned about maintenance of large caliber naval
gun capability?
Answer. Beginning in 2008, the Navy has been actively overhauling and upgrading the Cruiser Mk 45 guns, via the Cruiser Modernization Program. To date, gun
overhauls and upgrades have been made on nine Cruisers. Additional Mk 45 gun
overhauls and upgrades are being executed on two Cruisers.
Outside of the planned overhauls in the Cruiser Modernization Program, the
Navy continues to overhaul and upgrade Mk 45 guns from decommissioned ships
for installation on DDG51 new construction ships. The Mk 45 guns that remain
in service in their as-built configuration will continue to receive regular pier-side
maintenance availabilities at 5-year intervals.
The Navy plans to keep the guns in service to the end of the service life of the
ships and will continue to maintain the guns through an effective pier-side maintenance program.
Question. Does the Navy have any plans to enhance the capability of the Mk 45
gun system to execute ship to shore missions in the future?
Answer. We are reviewing our options to develop a precision guided munitions
program for our 5-inch projectiles. The Center for Naval Analysis is conducting a
follow-on study to the Joint Expeditionary Fires Analysis of Alternatives. This study
will analyze the contributions of all joint and fleet fires to support Navy science and
technology efforts, existing campaign analysis and the development of a long-term
Naval Gun transition plan. This study is expected to be complete this fall and will
ultimately contribute to an extended range, precision guided munitions program.
Our desire is to augment Naval precision fires with viable and cost-wise 5-inch
naval gunfire solutions.
Question. Does DOD support the co-production and participation of the U.S. aerospace industry in the Iron Dome defense program? If so, what plans does DOD have
to incorporate the U.S. aerospace industry into co-production of this program? Has
DOD communicated any such plans to its counterparts at the Israeli Ministry of Defense?
Answer. Yes, DOD supports fully Iron Dome co-production and participation of the
U.S. aerospace industries in the Iron Dome defense program. In an Exchange of Letters with the Israeli Ministry of Defense concerning Iron Dome funding, the United
States specifically requested Israeli support for exploring co-production opportunities.
The Israel Missile Defense Organization (IMDO) recently engaged with its prime
contractor and potential U.S. sub-contractors to develop an acquisition strategy supporting U.S. co-production of Iron Dome interceptor components.
Question. Is there precedent from the Arrow and Davids Sling programs for such
an arrangement?
Answer. There is precedent for both dual-source component production and for
U.S. industry being the sole supplier of missile components to an Israeli prime contractors production line.
Under the terms of the Arrow System Improvement Program (ASIP) memorandum of understanding, IMDO directed Israeli Aerospace Industries to establish
itself as a dual-source supplier with U.S. industry for Arrow-2 booster motors and
major subcomponents to increase missile production capacity. U.S. industry completed deliveries of Arrow-2 components in 2010.

66
The Davids Sling Weapon System and Arrow-3 production agreements are still
being discussed, but the development programs for both of these systems assume
that the Israeli prime contractors will establish subcontract agreements with U.S.
suppliers for certain components to be built in the United States, including motors,
guidance computers, launch systems, and batteries.
Iron Dome is an Israeli-developed and produced system used solely by the Israeli
military. Israeli industry has subcontracted with U.S. firms for some subcomponents. The Missile Defense Agency (MDA) has asked IMDO for a list of those firms
and subcomponents as part of our effort to explore co-production opportunities. This
effort is ongoing.
Regarding co-production of Iron Dome for U.S. defense purposes (including the
Tamir interceptor), there is no U.S. operational requirement for this weapon system.
MDA intends to pursue data rights and technical data packages (TDPs) that would
enable production of the Iron Dome weapon system should a U.S. operational requirement arise in the future. Additional acquisition steps would need to be taken
to execute a co-production program, even if the United States had TDPs and data
rights. MDA would have to develop an acquisition strategy, determine a production
decisionmaking authority, establish source selection, and budget funds for procurement, operations, and sustainment. These activities are not currently planned due
to the lack of a U.S. operational requirement.
Question. Would a second source of U.S. manufactured interceptors and launchers
provide greater supply chain readiness in the production of this system and better
support for the inventory objectives of our ally, Israel?
Answer. Although a second source of inventory is typically preferred, Israel has
not raised improved Iron Dome supply chain readiness and support for inventory
objectives as a concern. Moreover, the cost to establish or maintain a second source
was not included in Israels funding profile, and Israeli Ministry of Defense (IMOD)
officials have stated that their industry can meet their Iron Dome production needs.
Question. Admiral Gary Roughead provided a plan to sustain the Phalanx Block
1B Close-in Weapon System (CIWS) in a December 2010 letter, stating a sevenyear overhaul cycle provides the most efficient path to maintaining operational
availability . . . our CIWS Program Manager assesses that 36 overhauls per year
will be needed beginning in FY12.
I am told that the Navy later determined a more affordable 20-year plan would
necessitate 20 overhauls per year coupled with 52 reliability, maintainability, and
availability (RMA) kits per year, beginning in fiscal year 2013, to maintain the required operational availability.
To date, I am informed that the Navy has not made funding requests sufficient
to meet the requirements outlined in either plan above.
What will be the overall impact of this shortfall across the Future Years Defense
Program?
Answer. Based on the Presidents budget for fiscal year 2013 CIWS maintenance
funding profile, which established a threshold of 52 Reliability, Maintainability and
Availability (RM&A) kits and 20 Class A overhauls, there will be no overall impact
across the Future Years Defense Program. In fiscal year 2013, our funding request
includes 24 RM&A kits and 8 Class A overhauls. The profile then ramps up to exceed the threshold for RM&A kits in fiscal year 2015 and to exceed the threshold
for Class A overhauls in fiscal year 2016.

QUESTIONS SUBMITTED

BY

SENATOR DANIEL COATS

Question. How does the Department of Defense (DOD) plan on commemorating

the 100th anniversary of World War I and the 75th anniversary of World War II?
Answer. Looking ahead to the 75th anniversary commemoration of World War II
and the centenary of World War I, DOD anticipates a range of activities to honor
the men and women who served in those immense conflicts. As with previous commemorations, we expect to work closely with organizations that share our commitment to these events, including veterans groups, educational institutions, and State
and local governments. Because the dates for these observances are still several
years away (2016 for World War II and 2017 for American involvement in World
War I), plans have not yet taken shape.
Question. A December 2011 Navy Inspector General (IG) report concluded
. . . the history and heritage of the U.S. Navy is in jeopardy. Is the Naval History
& Heritage Command (NHHC) the only military history program in DOD that
stores its collection of documents, photographs, art works, and artifacts in facilities
with broken or nonexistent temperature and humidity controls or is this common

67
throughout the history programs of the Marine Corps, Air Force, and Army? Is our
Navys history and heritage worth preserving in your view?
Answer. The Air Force Historical Research Agency is the official repository for
some 750,000 historical documents. Following the installation of an archival-quality
heating, ventilation, and air conditioning system in 2010, its archival material is
currently stored in a facility with highly effective, archival-standard temperature
and humidity controls. The system also screens particulate matter. In addition, the
lights have ultraviolet light screens to limit damage to documents. The Air Force
Art Program, which contains more than 10,000 pieces, stores its art in climate controlled conditions as well and requires that items on loan be properly protected
while on display. The National Museum of the Air Force, certified by the Association
of American Museums, maintains its heritage collection of artifacts and photographs
in climate controlled conditions. Although the most valuable of the aircraft collection
are indoors, some aircraft because of their large sizes, are displayed outdoors and
maintained under clear guidelines for the protection and preservation of these artifacts.
The Army also has a large collection of documents, photographs, art works, and
artifacts, but the facilities for such activities are, on the whole, sufficient to preserve
them. The U.S. Army Museum Support Center at Fort Belvoir, Virginia, was recently opened as a state-of-the-art facility for conserving and preserving the Armys
central artifact collection worth approximately $1 billion and its priceless Army Art
Collection comprising more than 12,000 works of original soldier art. The facility
was built with an heating, ventilation, and air-conditioning (HVAC) system that
maintains the proper humidity and temperature to preserve them in an optimal
state. Many of the other artifact collections in the Army museum system, some 107
museums and historical holdings throughout the world, have less effective preservation means at their disposal, but the U.S. Army Center of Military History constantly monitors their status and assists in their preservation to the extent permitted by always scarce resources. No significant collections are currently at risk.
As for document and photograph holdings, the Army Heritage and Education Center
and its component Military History Institute, which are part of the Army War College at Carlisle Barracks, Pennsylvania, serve as the Armys principle archives for
non-official records, photographs, and documents. Those items are housed in a facility with temperature and humidity controlled space specifically designed for such
collections.
We believe that our service history and heritage is worth preserving. Our service
history is the thread that connects our soldiers to those who have preceded them.
It forms the foundation for all of our soldiers. As such, our service history and heritage is eminently worth preserving for future generations of soldiers and Americans
to enjoy and become inspired.
As noted, the December 2011 Navy IG report identified significant facilities issues
at NHHC, particularly at its headquarters at the Washington Navy Yard. Since November 2011 the command has engaged in removing its most at-risk collections to
environmentally adequate locations, and where that is not possible, has worked with
the local public works office to perform repairs to provide adequate environmental
conditions for particular collections. (CNIC) has provided funding to develop a facilities plan to ultimately house NHHC HQs collections in fully compliant facilities.
[NHHC cannot provide information on Marine Corps, Air Force, and Army facilities.]
The Navys history and heritage is worth preserving. Information about past
naval operations is valuable not only to historians, but to modern-day naval decisionmakers and to our future naval leaders. In addition, naval history provides an
important reminder to the American people about the timeless maritime nature of
this country and its economy, and therefore of the necessity of a strong Navy to protect it. Historical artifacts provide a direct connection to past events that complements documentary history, and for some audiences is a more effective vehicle
for telling the Navys story. Historical itemsarchives, artifacts, artwork, photographs, digital mediarequire careful management if they are to relate the Navys
history to future generations of citizens and scholars. Appropriate facilities are a
fundamental necessity for proper stewardship of these important and in some cases
irreplaceable resources.
The Marine Corps takes considerable pride in our heritage and is invested in preserving our historical records, photographs, oral histories, and objects related to that
heritage. These items inform the training and education of our Marines, and provide
material and information that can be applied to new programs, such as weapons
and uniforms. Marine Corps heritage is an organizing principal and source of information necessary for scholarly efforts within the formal schools, including the Marine Corps War College. Historical collections also assist in developing written his-

68
tories, case studies, and student masters theses, all of which are published by Marine Corps University. Further, the pictorial, written, and material history of the
Corps is used to support outreach and recruitment efforts necessary to maintain
good public relations and a well-staffed force.
In 2006, the Marine Corps Heritage Foundation opened the National Museum of
the Marine Corps, a state-of-the-art facility that is the centerpiece of the Marine
Corps Heritage Center. This facility houses approximately 10 percent of the total
collection. While the majority of the Marine Corps historical objects, including our
records and photographs, are stored in satisfactory conditions at Marine Corps Base
Quantico and at other locations, the Marine Corps houses some objects in spaces
with inadequate temperature and humidity controls. To the extent possible, items
stored in less-than-ideal conditions include more durable objects, such as ground vehicles and aircraft. Works of art are in excellent storage at a rental facility near
the Museum.
The Marine Corps has developed a comprehensive long-range plan for the care of
its collections. Existing storage buildings have been improved in recent years and
will continue to be maintained. Some of these have potential to be further improved
to provide long-term solutions; however, there remains a requirement for additional
climate-controlled space to house collections and provide work space for conservators. A large museum support facility has been recommended as a potential solution.
Marine Corps Base Quantico and the Museum are working proactively on interim
solutions that promise improved conditions and accessibility. The Marine Corps Heritage Foundation remains committed to building a second and final phase of the National Museum, which will extend the Marine Corps story from Beirut to Afghanistan and provide a home for some additional artifacts and works of art. The Marine
Corps remains committed to preserving our history and heritage that we have invested so much in since 1775.
Question. The competition for the C17 Globemasters F117 engine sustainment
supply chain fails to apply better buying guidelines to gain readily apparent savings. This engine is more than 90 percent common with the commercial PW2000 engine family, yet the United States Air Force (USAF) has neither accepted Federal
Aviation Administration (FAA) certifications for common repairs and parts, nor established a source approval request (SAR) process to review and certify alternative
sources to enable competition, despite informing the Congress that it has had the
F117 maintenance technical data via a General Terms Agreement with the OEM
since last December. Consequently, the USAF has essentially disqualified alternative vendors, since the OEM remains the only approved source. The annual savings from competing the F117 supply chain would likely be $200 million per year;
yet, the USAFs sustainment strategy would gain no efficiencies from supply chain
competition until 2018.
What process is being used to identify and pursue opportunities for efficiencies,
such as competition for the F117 supply chain, and how did this program escape
oversight for cost accountability by the USAF and OSD?
Answer. In the case of the F117 (C17) engine, officials of the Office of the Under
Secretary of Defense for Acquisition, Technology and Logistics (AT&L) participated
in reviews of the proposed costs and negotiation strategy for C17 sustainment. In
the process of doing so, AT&L learned of the Air Forces plan to break out engine
sustainment into a separate contract from the Boeing Globemaster III Integrated
Sustainment Program in order to reduce costs. While current acquisition plans call
for the transition to competition for overhaul and supply chain management of F117
in the 2016 to 2018 timeframe, the Department is exploring opportunities to reduce
costs further by accelerating the transition. The Department is working to improve
the opportunity for competition and improved cost oversight of C17 sustainment.
Question. Has OSD evaluated whether a more robust and immediate SAR process
could result in greater savings for the Air Force?
Answer. As part of the ongoing Office of the Secretary of Defense review of the
acquisition strategy for F117 sustainment, the Department is reviewing the Air
Force Source Approval Request process to seek opportunities for greater savings.
Question. Has OSD evaluated the savings associated with accelerating competition for F117 repairs and parts ahead of the Air Forces proposed timeline, which
unnecessarily accepts the OEM as the only qualified supply chain source for at least
the next 5 years?
Answer. The Department is exploring opportunities to reduce costs by accelerating
the transition to a competitive engine overhaul and supply chain management construct.
Question. The Senate version of the fiscal year 2013 National Defense Authorization Act (NDAA) as reported by the Senate Armed Services Committee contains a
bipartisan provision requiring you to submit a report detailing the effects of budget

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sequestration on DOD by August 15. There is also a similar standalone bill in both
the House and Senate that would require similar transparency concerning the
scheduled sequestration for both defense and non-defense cuts.
Do you support this reporting requirement in the Defense authorization bill to
allow a full understanding where the defense cuts will occur and to what degree?
If the Defense authorization bill has not yet been enacted by August, would you
pledge to still submit such a report to the Congress by August?
Answer. The Department has no official comment about this particular legislation
pending before the Congress.
Question. Absent the provision in the fiscal year 2013 NDAA bill and the freestanding bills in the House and Senate that would provide important transparency
about such cuts, do you currently have this level of detail internally at DOD now
that we are less than 6 months away from these cuts being carried out?
Answer. The Department has no official comment about this particular legislation
pending before the Congress. While the Office of Management and Budget (OMB)
has not yet officially engaged agencies in planning, the OMB staff is conducting the
analyses needed to move forward if necessary. Should it reach the point where it
appears the Congress does not do its job and the sequester may take effect, OMB,
DOD, and the entire administration will be prepared.
QUESTIONS SUBMITTED

TO

GENERAL MARTIN E. DEMPSEY

QUESTION SUBMITTED

BY

SENATOR TOM HARKIN

Question. General Dempsey, the Department of Defense (DOD) has become increasingly concerned over the past few years regarding our militarys dependence
on petroleum-based fuels. These concerns relate to both the ready availability of
fuels during times of conflict, and to the increasing costs of such fuels.
For example, its been reported that the Pentagon spent $17.3 billion on petroleum in 2011, a 26-percent increase from the previous year with practically no
change in the volume purchased.
Its also been reported that for every $0.25 increase in the price of jet fuel, the
DOD must come up with an extra $1 billion annually.
Relative to future supplies and prices, we can all see that global fuel demands
will continue to increase steadily as the economies of the BRIC nationsBrazil,
Russia, India, and Chinaand similar nations grow and demand more fuel for
transportation and industrialization.
Obviously, some of our leaders in the Pentagon see these future threats as well,
and I commend the Department of the Navy for signing a memorandum of understanding (MOU) with the Department of Energy (DOE) and with United States Department of Agriculture (USDA) for the development of commercial biofuels production capabilities. I understand that under this MOU, the DOD intends to fund multiple drop-in biofuel production facilities under the Defense Production Act.
Could you please speak to DODs long-term strategy for assuring future fuels supplies and the role that you believe domestic biofuels can and should play in that?
More specifically, could you comment on the role that this joint Navy/DOE/USDA
procurement activity plays in DODs longer term fuels security strategy?
Answer. DODs strategy for operational energy is focused on ensuring our armed
forces have the energy resources required to meet 21st century security challenges.
Our strategy includes efforts designed to reduce demand, protect, and secure access
to energy supplies and to integrate operational energy considerations into the full
range of planning and force development activities. Each of our services recognizes
the important role energy plays in support of national security and is pursuing initiatives designed to better understand how much energy is being consumed, where,
and for what purposes in order to reduce demand and minimize risk to the
warfighter.
QUESTION SUBMITTED

BY

SENATOR HERB KOHL

Question. To help with this transition, we are expanding job training programs
for veterans and studying how military skills can be maximized in civilian occupations.
General Dempsey, the programs available to troops transitioning to civilian life
are spread out across several different Federal agencies. How is the Department of
Defense (DOD) making sure that servicemembers know how to access the programs
that are available to them when they leave the military?

70
Answer. The Department has many efforts to ensure our servicemembers know
how to access transition programs. Three such noteworthy efforts are:
The Transition Assistance Program Re-Design.The new re-designed Transition Assistance Program (TAP) provides an individualized, servicemember specific series of modules that assist the servicemember in preparing for civilian
life. It also includes our interagency partners aid in preparing all
servicemembers for a successful transition into our Nations communities and
their civilian life.
The Presidential Task Force.In August 2011, the President called for the
creation of a Task Force led by the DOD and Veterans Administration, with the
White House economic and domestic policy teams and other agencies, including
Department of Labor to develop proposals to maximize the career readiness of
all servicemembers. The vision of moving TAP from an end of career event to
the Military Life Cycle was used as a partial response to President Obamas call
to improve education and training of military members to make them career
ready. On December 27, 2011, the Task Force submitted a report outlining and
conceptualizing its 28 recommendations to improve the career readiness of military members. The President accepted the recommendations and encouraged
the Task Force and the agencies to carry forward in implementing the recommended programs.
Long-Term Goal.The Departments long-term aim of the new transition
service delivery model is to embed the servicemembers preparation for transition throughout their military lifecyclefrom accession through separation,
from service and reintegration, back into civilian life. This will require thoughtful goal setting and planning to apply military experience to longer term career
goals in the civilian sector, whether after a single enlistment term or a 20-plus
year military career. Servicemembers and military leadership will be engaged
in mapping and refining development plans to achieve post-military service
goalsa significant culture change.
QUESTIONS SUBMITTED

BY

SENATOR THAD COCHRAN

AIRSTRIKES IN AFGHANISTAN

Question. General Dempsey, on June 12 in Afghanistan, President Karzai clarified

his position on airstrikes stating . . . an agreement has been reached clearly with
NATO that no bombardment of civilian homes is allowed for any reason, that coalition forces could not use airstrikes even when they are under attack. Is this the
correct interpretation of the agreement with Afghanistan? And how does this impact
our ability to protect our forces who come under fire?
Answer. As always, Afghan and coalition forces retain the inherent right to use
aerial munitions in self-defense if no other options are available. On June 12, 2012,
the Commander, International Security Assistance Force and United States ForcesAfghanistan, gave the order to coalition forces that no aerial munitions be delivered
against civilian dwellings with the exception of the self-defense provision. This order
was in accordance with an understanding made with Afghan President Hamid
Karzai. This measure was taken to protect the lives of Afghan civilians.
AMPHIBIOUS WARSHIPSOPERATIONAL RISK

Question. General Dempsey, as you are putting together your thoughts to address
my question on the level of risk being assumed with amphibious lift capability and
capacity, it might be helpful to the subcommittee if you touch on operational availability. Again, the Navy and Marine Corps agreed on a fiscally constrained minimum force of 33 amphibious warships to meet a 38 amphibious warship force requirement. Currently, there are 29 ships in the Navys amphibious fleet, and a common planning factor is that 10 to 15 percent of warships are in overhaul and unavailable at any given time. Just doing the straight math, it is obvious that the
number of operationally available ships is well below the requirement acknowledged
by the Department of the Navy. What other class of warship is the Department accepting this level of risk? And if any, are those ships in as high demand by the combatant commanders? Secretary Panetta talked to the agility of these ships; I understand that the combatant commanders ask for these ships because they are agile
and can address a multitude of missions and situations.
Answer. Each year, the combatant commanders submit force requirements to my
staff, which include capabilities that reside in all services. These requirements, in
total, routinely exceed the services capacity to meet them. Within the Navy, this
includes not only demand for amphibious platforms, but also aircraft carriers, cruis-

71
er/destroyers, coastal patrol boats, and frigates. The strategic risk associated with
these capacity shortfalls is balanced among the combatant commanders based upon
Secretary of Defense policy and guidance, which reflect the National Military Strategy. In general, the military sizes to strategy-based requirements, not on operational availability. It manages availability based on threat.
Specific to the issue of amphibious ship capacity, the Navy remains committed to
providing 30 operationally available amphibious ships to meet Naval amphibious
ship demand. With some risk, 30 amphibious landing ships can support a two-Marine Expeditionary Brigade (MEB) forcible entry operation. This force accepts risk
in the arrival of combat support and combat service support elements of the MEB,
but this risk is appropriately balanced with the risk in a wide range of other important warfighting requirements within todays fiscal limitations.
Navy can achieve this operational availability goal by sustaining an inventory of
about 32 amphibious ships in the mid to long-term. The 32-ship amphibious force
being procured to meet this need will optimally be comprised of 11 LHA/D, 11 LPD
17, and 10 LSD. To support routine forward deployments of Marine Expeditionary
Units (MEUs), the amphibious force will be organized into nine, three-ship CONUS
based Amphibious Ready Groups (ARGs), and one four-ship ARG based in Japan,
with an additional big-deck amphibious ship available to support contingency operations worldwide. Two LSDs will be taken out of commission and placed in reserve
status allowing Navy to reconstitute an eleventh ARG as required in the future, or
to build up the number of ships in the active inventory, if necessary.
QUESTION SUBMITTED

BY

SENATOR DANIEL COATS

Question. Why is there no definition of victory in Joint Publication (JP) 102:

Department of Defense Dictionary of Military and Associated Terms?
Answer. JP 102 supplements common English-language dictionaries with standard terminology for military and associated use. The term victory does not require
inclusion in JP 102 because it is adequately defined by Merriam-Webster as:
1. The overcoming of an enemy or antagonist.
2. Achievement of mastery or success in a struggle or endeavor against odds or
difficulties.
SUBCOMMITTEE RECESS

Senator MURRAY. I would put the subcommittee into recess until

Senator Shelby appears.
Secretary PANETTA. We arent going anyplace.
Senator MURRAY. Good. You want to meet now, Mr. Secretary?
Thank you very much. And with that, the subcommittee is in recess until Senator Shelby arrives. Thank you very much.
[Whereupon, at 12:30 p.m., Wednesday, June 13, the subcommittee was recessed, to reconvene subject to the call of the
Chair.]